For BNP Paribas, the Brazilian economy should show signs of recovery from the second semester

The global economy is expected to start growing again in the second half of the year, but the pace of recovery will be different between developing and emerging countries, such as Brazil. According to BNP Paribas chief economist for Latin America, Gustavo Arruda, the US and the Eurozone should show stronger growth this and next year, while Latin America and Brazil should start to show signs of recovery in the last six months of the year.

As for the economist, the USA and the Eurozone are expected to grow 6.9% and 4.2% this year, and in 2022, 4.7% and 5%. In Brazil, the GDP is expected to increase by 2.5% and 3%, respectively. For the first and second quarters of the year, expectations are for domestic expansion of 0.5% and 1%, which are marked by a technical recession. The first two quarters of the year are affected by mobility restrictions. I don’t think this will have a lasting effect until the end of the year, “he estimated.

According to him, the delay in the Brazilian recovery reflects the bigger impact of the Covid-19 crisis on business. The second wave of the pandemic proved worse than the expected scenario in December. He explained during a press conference that the vaccination curve is lagging behind what we expected there, but we believe it should gain momentum from the second semester, adding that all residents should be vaccinated by the end of the first quarter of 2022.

For Arruda, the lack of vaccine inputs being checked now should not happen in the second half of the year because in addition to the Brazilian government buying vaccines from other manufacturers, developed countries like the United States and the United States should have the kingdom finished vaccinating. Vaccine, which means more vaccines are available.

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On inflation, BNP Paribas is forecast at 6.5% at the end of the year, above target. In the second and third quarters, the estimate was high, at 7.4% and 7.5%. Like other emerging countries, commodities are expected to continue to put pressure on food prices. For 2022, the IPCA is projected to be 4%.

Arruda also indicated that while Brazil’s central bank adopts an inflation target regime and looks at the next twelve months, the US is using average indicators. “The Federal Reserve (Federal Reserve, British Columbia, USA) remains calm and accepts the risk of further inflation. The Fed has changed the outlook for its inflation target and is therefore more willing to accept rising inflation for some time.”

As for the exchange rate, the economist said that the rate will remain weak, in response to concerns about the financial issue and political deadlocks. “The value of foreign currencies has been greatly devalued, and there is room for appreciation, but we do not believe in the short term. The exchange rates are expected to reach the end of the year at 5 Brazilian reals,” he estimated. For Selic, the estimate is set to reach 5% this year and 6.5% in 2022.

(Newsroom – Investments and News)

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