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IFI’s 2023 GDP forecast rises from 1.0% to 2.3%

IFI’s 2023 GDP forecast rises from 1.0% to 2.3%

According to the report of the body associated with the Senate, there was a positive surprise in the GDP in the first quarter, mainly due to the increase in agricultural production.

Fernando Haddad (blue tie) and Luiz Inacio Lula da Silva

By Roberto De Lira Infomoney – The Independent Public Finance Corporation (IFI) raised its forecast for Brazil’s GDP growth in 2023 from 1.0% to 2.3%, according to the Public Finance Monitor (RAF) report released on Wednesday (14). However, the International Financial Corporation’s monthly economic analysis lowered the forecast for economic growth in 2024 from 1.4% to 1.2%.

According to the report, there was a positive GDP surprise in the first quarter, mainly due to the increase in agricultural production. “The result was much higher than expectations and led to a revision of the economic activity scenario,” justified the International Institute of Finance.

The contrast for this year includes a scenario of a slowdown in economic activity in the second quarter and a slowdown in the second half. For nominal GDP in 2023, projections point to an increase of 7.6% (revised from 6.4%), reflecting, in addition to real growth of 2.3%, an implied deflationary factor of 5.2%.

In current values, the GDP should reach R$10.7 trillion. For 2024, the projected value is R$11.3 trillion.

The text notes that the more optimistic macroeconomic scenario has improved the forecast for the central government’s primary revenues this year, and with it the federation’s preliminary outcome.

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IFI’s forecast for primary net revenue increased from R$1,887.7 billion to R$1,908.8 billion in 2023. As a percentage of GDP, net revenue was maintained at 17.9%. The main increase in relation to the revision of the scenarios submitted in May occurred in managed revenue (+ R$ 29.5 billion), despite an increase in ISI’s net collection forecast (+ R$ 3.8 billion).

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The improvement in the revenue scenario in June compared to May and the revision in GDP lowered IFI’s estimate of the central government’s primary deficit in 2023 from R$104.7 billion (1.0% of GDP) to R$84.8 billion (0.8%). of GDP) in the base scenario.

For 2024, the deficit forecast has increased from R$117.4 billion (1.0% of GDP) to R$105.5 billion (0.9% of GDP). Over the medium term (the period from 2025 to 2032), the primary deficit projection has remained at 0.4% of GDP, on average.

Even with a better scenario for flow indicators, data obtained up to the first four months of the year point to a reversal in the downward trajectory of total debt as a proportion of GDP, says the International Institute of Finance.

Based on the change in the central government’s initial revenue and deficit forecast for 2023, the forecast for total debt is now 76.7% of GDP at the end of this year. For 2024, the IFI forecast is now 80.9%, compared to the previous estimate of 81.9% of GDP.

“In other words, the improvement in the initial outcome forecasts for the central government, and thus for the consolidated public sector in 2023 and 2024, has resulted in a slight shift to the downside in the IFI estimates of total debt in the short term,” the report says.