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The year 2018 was much worse for the economy than what the market had predicted 12 months ago. In early January, badysts saw growth close to 3%, but have finally hijacked their forecasts to nearly 1%, according to the latest newsletter Focus of the year, published Monday. On the other hand, they were right in predicting that interest rates would not rise and that inflation would remain at a comfortable level.
Projections of more than 100 badysts are published weekly by the Central Bank's Focus Bulletin, with a median forecast of GDP, interest, inflation, trade balance and direct investment foreigners (IDE). It serves as a "compbad" to guide investors and businesses towards the future.
As a rule, Focus's forecasts take a little time to reflect the evolution of the economy at a given moment, recalls Marcel Balbadiano, principal researcher in the field of applied economics at FGV IBRE.
"Because it is a median of many market institutions, any change of scenery appears more slowly.For Focus changes, the median of all institutions needs to be changed before," he says.
Road traffic accidents have led economists to fairly correct positive badessments throughout the year. The most shocking was the truckers' strike, which caused an unexpected shortage crisis and worsened all the indicators of the economy, with a cascading effect.
It is also the unpredictability of the electoral dispute that corrected the expectations in the second half, while the future government was afraid to abandon the reform program, deemed necessary to address the budget deficit.
See the projections of the economy market in 2018:
- Forecast in January: 2.70%
- Forecast at the end of 2018: 1.30%
L & 39 The optimism that The beginning of the year 2018, marked by the economy, was gradually reduced by unexpected events and by an electoral conflict surrounded by uncertainties. It started with growth forecasts close to 3% and ended the year with a GDP slightly above 1%. The result will only be released in March 2019.
Market forecasts for GDP remained stable in the first quarter. They began to deteriorate from April, but the sudden fall occurred at the end of May, when truck drivers
But even before the economic downturn, economic indicators were already showing a much resurgence slower than we had imagined, says FGV's Balbadiano.
During the truckers' strike, GDP projections already declining were virtually cut in half. "Although the strike had a punctual effect on the economy, the activity was hampered in the global data of the year."
During the elections, estimates stagnated and even improved with the prospect that the next government would engage in a reformist program.However, weak GDP growth in the third quarter prompted economists to consider a smaller expansion until 2018.
- Forecast in January: 3.34 USD
- at the end of 2018: 3.8742 R $
A series of events started in 2018 have that the dollar ended up being much more appreciated than the real that had been predicted 12 months ago. At the beginning of January, the market thought that the currency would not fluctuate and would end the year at 3. R $ 34. If that happened, it would only be an appreciation of 0.90% in 2018.
But what we saw was very volatile and with a strong uptrend, which ended up 17% in the year, traded at R $ 3.88742 during the last session of 2018.
For the NGO brokerage specialist, Sidney Nehme, the January estimate was "unrealistic" and indicated an exaggerated optimism of the market.
"A dollar worth R $ 3.34 would be incompatible with the current situation in the country," Nehmé said.
The main reason the market was expecting such a stable exchange rate was that social security reform (seen as the only way to reduce the budget deficit) would be approved in the first half of the year. it was not the case.
In addition, the truckers' strike in the middle of the year added new uncertainties about the recovery of the economy and the trade war between the United States and China exerted additional pressure on the dollar.
Uncertainties in the electoral race from August to October led to sharp oscillations in the US currency, reaching almost the historic high of R $ 4.20. During this period, a speculative market movement did not exclude a dollar at $ 5.
"The market made a mistake in this movement because, unlike the previous electoral periods, which are very uncertain, Brazil now has sufficient foreign exchange reserves to pay their debt and no risk of currency crisis," says Nehme, of l & # 39; NGOs.
The expert reports that the current level of the dollar, around R $ 3.90, includes a "risk premium" for uncertainties related to the approval of the social security reform and the way in which it will be implemented, which could last during the first half of the year. next year.
- Forecast for January: 3.95 %%
- Forecast for end 2018: 3.69%
Closed inflation for 2018 will be announced on January 11, but it is already announced. knows that he should be getting closer to what the average economist had predicted a year ago. Although initial and final forecasts were approximated, estimates of the price trajectory varied considerably during the year, impacted by inflationary surprises.
According to Balbadiano, of FGV, some events have raised prices. "In April, inflation was lower than expected, but the truckers' strike quickly shut down the economy and pushed up inflation," he recalls.
In June, the general index of consumer prices (IPCA) peaked at 1.26%, under the influence of the temporary decline in the supply of products and services. "Although it was a one – time event, it had this effect for the year 's data," says Balbadiano.
Another factor behind changes in price forecasts is the high volatility of the exchange rate. A stronger dollar, thanks to external factors (trade tensions) and internal factors (electoral dispute), led economists to estimate inflation at around 4.5% at the center of the target.
But shortly after the elections, the exchange rate returned to the downtrend and the weak economy had a slight effect on prices. Inflation declined again and became negative in November. "It was a surprise, it became bigger than expected," said Balbadiano.
- Prediction January: 6.75%
- Rate at the end of 2018: 6.5%
The year 2018 was almost stable in Selic year, with forecasts very close to the scenario at the end of the year The market expected in January that British Columbia would raise the base rate to 6.75% at its last meeting of the year, but at 6 , 5% during the seventh consecutive stay. Twelve months ago, Selic was 7% a year.
"In March, the cuts were even larger than expected, and then the rate stayed constant all year," recalls Balbadiano of the FGV, citing the end of a long pullback begun in October 2016, when he was at the level of 14.25%.
Between March and April, economists had even estimated that interest rates would be lowered to 6.25%, but exchange rate shocks, motivated by external factors (trade and emerging market crises) and factors domestic strike drivers) has kept the rate at 6.5%.
Despite the high volatility of the dollar in the second half, inflation is well behaved and allowed British Columbia to maintain its interest rates.
"It was possible that, if the result of the elections is unfavorable in the absence of tax reforms, interest increases again after the second round, but that did not happen," he said. Balbadiano.
- Forecast in January: Surplus US $ 52 billion
- Forecast to end 2018: Surplus US $ 57.1 billion
Trade balance expected to be better that if last year, it will still be less than 63.2 billion US dollars in 2017.
Brazilian exports benefited in 2018 due to a change of position of the Brazilian government to the This is because of the commercial partnerships, as well as the tension between the United States and China, said Carlos Stempniewski, economist and professor of foreign trade at the faculties of Rio Branco.
"In a very subtle way, the government started to leave aside the Mercosur issue and turn to bilateral claims, such as the issue of meat exports in the Middle East, which has seen a marked improvement in exports, "he said. . Beef exports reached a record this year.
Trade with Brazil was favored by the tariff war between the United States and China, which began to apply tariffs on products imported from both countries. The imposition of surcharges on soybeans. Asians, the world's largest consumers of soybeans, have begun to buy more in the Brazilian market because they have suspended purchases of US soybeans.
"More Chinese people have started to be interested in Brazil's agri-food sector," Stempniewski said. According to him, exports of quality corn have also increased considerably, which has benefited the Brazilian balance.
FDI (Foreign Direct Investment)
- Forecast in January: 80 billion USD
- Forecast at end of 2018: 75 billion US
Foreign investment in Brazil has been below what was expected, but will still have better results than in 2017, when Brazil had received an influx of resources of 62.7 billion US dollars from abroad.
The year was marked by the influx of Chinese investments in Brazil, particularly in the fields of transmission energy and wind energy, said the Professor of Foreign Trade Carlos Stempniewski.
"China has been instrumental in investing in Brazil and we depend on it much more today than the United States," said Rio Branco professor.
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