Focus x Reality : What Were the Economic Forecasts for 2023?

Wagner Geremia
Boletim Focus x Realidade: Quais Eram as Previsões Econômicas para 2023?

Have you ever asked yourself: what is the purpose of market economic forecasts ? What 's more , are these predictions really accurate ? Let's examine the projections made by market analysts for the Brazilian economy in 2023 and compare them with what actually happened in the economic scenario .

What was the market forecast for Brazil?

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Image 1: Focus Bulletin of 01/06/2023

Last year, the Focus Bulletin anticipated inflation of 5.36% for Brazil in 2023. However, according to IBGE, effective inflation closed the year at 4.62%. Regarding the exchange rate , the forecast for the end of 2023 was R$5.28, while the dollar ended the year close to R$4.85. The Selic rate , initially projected at 12.25% by the Focus Bulletin , was adjusted by COPOM , which, in its last meeting on December 14, 2023, set the basic rate at 11.75% per year.

Last year, the Focus Bulletin anticipated inflation of 5.36% for Brazil in 2023. However, according to IBGE, effective inflation closed the year at 4.62%. Regarding the exchange rate, the forecast for the end of 2023 was R$5.28, while the dollar ended the year close to R$4.85. The Selic rate, initially projected at 12.25% by the Focus Bulletin, was adjusted by COPOM, which, in its last meeting on December 14, 2023, set the basic rate at 11.75% per year.

Image 2: Dollar Closing in 2023.

In the financial scenario, investors seek profitable shareholdings and income. The diversification of assets and portfolios, combined with macro and microeconomic analysis, boosts profits. Companies attract investment, funds and capital. Trading stocks, investing, speculating and hedging require economic analysis. Investors earn gains, dividends and interest on equity. The volatility of assets is proportional to earnings. Pay-out challenges the risk-reward formula. In the stock market, variable and fixed income, derivatives and commodities, the focus is on gains.

Image 3: Interest closing in 2023. Interest at 11.75% per year.

In the financial market, investors seek profitable shareholdings and income. Diversifying assets and portfolios, with microeconomic analysis, boosts gains and attracts companies, investment funds, capital and investors. Trading stocks, investing, speculating and hedging require economic analysis. Investors obtain gains, dividends and interest on equity. Asset volatility is proportional to earnings. Pay-out challenges the risk-gain equation. In the stock market, variable income, fixed income, derivatives and commodities, the focus is on gains.

Image 4: Inflation closing at 4.62% in 2023. Source: IBGE

Even with so many errors, is the Focus Bulletin useful?

We observed that market expectations and projections at the beginning of 2023 were pessimistic. However, throughout the year, Brazil revealed its resilience, recording economic growth of around 3% per year, even with a high real interest rate , above inflation . Reading the Focus report becomes fascinating when we contextualize the scenario experienced. At the end of 2022 and beginning of 2023, we were facing a political crisis marked by the tumultuous transition of the new government, in addition to concerns about high inflation and the fear of its spread across different sectors of the economy. It is worth remembering that, in June 2022, accumulated inflation reached 11.8% per year.

It is a fact that last year's Focus Bulletin did not get any of its predictions right, however, it is crucial to remember that this is not the central purpose of the report. The objective is to provide investors with insights to understand market trends, thus allowing for more informed and assertive investment decisions.

What to expect from Investments in 2024?

I have been following the market closely for many years, and this year seems to me to be a year of investment euphoria, where asset prices will take off from their valuations , because if interest rates fall again, many of the forced investors , those who They don't want to invest , but they are forced to invest, they will be forced to buy risky assets . About me? I also have to decide whether to follow the euphoria bandwagon or remain on the sidelines and watch everyone have fun. Only those who invest know how hard it is to see investments that make no sense at all, overperforming an entire logic.

Any signs that it will be a difficult year?

Before he died, one of the greatest investors who ever lived, Mr. Charlie Munger, left a pile of cash and cash equivalents at his and Warren Buffett's company, Berkshire Hathaway . And he stated that the chances of a market correction were fifty-fifty.

If you need a CNPI analyst to help you with your investment selection, credit analysis or company valuation , contact Wagner Geremia.

Keywords:

How to Invest, Best Investments, Investments for Beginners, How to Make Money with Investments, Safe Investments, Profitable Investments, Investments for the Future, Investments for Retirement, Investment in Fixed Income, Investment in Variable Income, Treasury Direct, CDB, Investment Funds , Shares, Real Estate Funds, Private Pension