Economy & Business - November 2021

BRAZIL | Economic outlook dims. Private bank Itaú Unibanco released a macro-scenario update on 25 October in which it revised down its 2022 GDP forecast for Brazil. Itaú now expects Brazil to suffer a recession next year, projecting -0.5% growth, down from an earlier forecast of 0.5%. GDP is expected to grow 5% this year. Amongst other things, Itaú cites rising inflation and accompanying monetary policy decisions as explanations for its negative 2022 forecast. Brazil’s 12-month consumer price index stood at 10.25% in September, with inflation expected to keep rising, and two days after Itaú released its forecast update, the central bank (BCB) enacted a 150 basis-point hike to the benchmark interest rate, the Selic, bringing it to 7.75%. Itaú expects the Selic to rise to 11.25% by the start of 2022. The bank is the first financial institution to predict a recession for Brazil next year, but concerns are growing as to the pace of the country’s economic recovery, as the government is showing signs of abandoning all fiscal rigour ahead of the October 2022 presidential elections in which President Jair Bolsonaro is expected to seek a second term.

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