2022 GDP will have an upward revision after the 2nd quarter, says Guedes adviser

The positive result of 1.2% of GDP in the second quarter of 2022 will make the Ministry of Economy revise its projection for the indicator this year, said the special advisor for economic studies, Rodrigo Boueri, this Thursday (1st).

In a press conference, Guedes’ adviser said that if Brazil stops growing and does not register an advance in economic activity in the second half of the year, it will end 2022 with a positive balance of 2.4% in GDP.

“We don’t think Brazil will stop growing in the third quarter. So 2% is already dated, it’s gone, we’re going to have to rotate the grid,” she said.

Boueri did not reveal how much the projection would go up, saying that there would still be revisions by the Secretariat for Economic Policy.

One of the reasons why the Ministry believes that Brazil will continue to grow throughout the year is due to the effects of monetary policy, which, according to Guedes’ advisor, are already being felt by economic activity, which in turn has not stopped advancing.

“In order to have growth close to zero in 2023, we will have to have a very big slowdown, a crashlanding, but the impacts of monetary policy are already there. We are unlikely to have this devastating and rapid monetary policy effect, the BC has already been working on this process for quite some time,” he said.

Regarding the projections for 2023, Boueri pointed out that monetary policy will begin to “row in favor” from the second half of the year, and that forecasts about the growth of economic activity by the market and the government itself have been “consistently” wrong.

“Everyone is erring downwards, systematically erring. Not just the market, but the government as well… what we can expect is that monetary policy will be rowing less and less against activity over the next year,” he declared.

“From the third quarter of next year, she [política monetária] will go rowing in favor. If now at the peak we are already growing 5% per year, annualized, when it stops rowing against it, not because we expect that economic activity will worsen”, she concluded.