Text commented by Bruno de Queiroz - Executive Director of Galeazzi & Associados

I have emphasized the issue of high interest rates in Brazil (currently, the country's real interest rate is the highest in the world), and I continue to analyze the forecasts for 2024, taking into account how 2023 is coming to an end.

In the 'Boletim Focus', a report produced by the Central Bank of Brazil (Banco Central do Brasil), there is a forecast of a decrease in IPCA in 2024 to 3.91%. Regarding the Selic rate, there have been no changes in the projections; the rate will be 11.75% at the end of this year and 9.25% in 2024. The GDP estimate has remained stable (previously 2.89%, now 2.85% in 2023).

Regarding inflation, the observed movement shows that the strategy adopted by the Central Bank has brought the expected results, although with significant side effects. However, we know that inflation, even at these levels, can be a challenging factor in the economy since it is common for these costs to be passed on to prices, creating significant inflationary pressure throughout the production chain.

As for interest rates, I am particularly less optimistic than the forecasts, and unless proven otherwise, I see difficulties in reaching a single-digit interest rate by the end of 2024, especially with the fiscal deficit projected for the next year. The truth is that, despite media impacts, we have not been doing our homework in this field, and we still have a scenario of certain instability.

Finally, regarding GDP, our performance continues to be modest and below potential. We have an economy that could deliver much better results than those seen, but our legal environment still causes a lot of uncertainty, and the economic environment is still very volatile.

I reiterate that business leaders and advisors should prepare for whatever comes. Speaking specifically to advisors, the time has come for leaders to develop their strategies for the coming year and also a contingency plan for any changes.

How are preparations for 2024 going?

(Source: Infomoney, 2023)

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