Itaú BBA - A more benign inflation scenario

Brazil Scenario Review

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A more benign inflation scenario

December 14, 2018

Our inflation forecasts were revised downward, to 3.8% this year and 3.9% next year

Please open the attached pdf to read the full report and forecasts.

 

Our forecasts for GDP growth are 1.3% in 2018 and 2.5% in 2019.

We narrowed our estimate for the primary budget deficit in 2018 to 1.7% of GDP, from 1.8%. For 2019, we expect a 1.3% deficit, but the result may be better due to possible extraordinary revenues. 

We maintained our year-end forecasts for the exchange rate at BRL 3.90 per USD in 2019 and 2020.

Our inflation forecasts were revised downward, to 3.8% this year and 3.9% next year. For 2018, we adjusted our estimates for fuels, electricity and some market-set prices. For 2019, we incorporated the impact of lower fuel prices and inflationary inertia.

The changes in inflation forecasts and balance of risks in the statement of the December meeting of the Copom (Monetary Policy Committee) are consistent, in our view, with our own forecast of stable Selic rate at 6.5% pa throughout 2019.


 

Please open the attached pdf to read the full report and forecasts.



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