Brazilian GDP estimated to have grown 5.1% in 2021

The Ministry of Economy of Brazil estimates that the country’s GDP increased 5.1% last year, a strong rebound after the -4.06% slump in 2020 due to the pandemic fallout. Official growth figures for full-year 2021 will be published in March. A point of concern that could affect further economic expansion is inflation, which hit virtually zero in mid-2020 but bounced back and finished the year 2021 at 10%, amid global supply bottlenecks.

According to the main market players survey (Focus report), last published in January 2022, inflation should subside this year to 5.15%, as the policy interest rates should rise from 9.25% currently to 11.75% by the end of the year. GDP growth could slow down to 0.29%.

As in 2021, foreign trade in goods should alleviate currency pressure, with an expected surplus of US$ 56 billion in 2022, similar to the forecast foreign direct investment inflow of US$ 58 billion. The dollar has risen from 5.20 reais to 5.58 reais over the year of 2021, and the analysts polled by Focus report expect it to remain around 5.60 reais by the end of this year.

One topic that analysts will be following closely this year is the electoral process. Brazilians are going to the polls in October to elect their President, states’ Governors, and members of the Congress (both Senate and Chamber of Deputies), as the regular four year terms end in January 2023.

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