I work with both macroeconomic and microeconomic forecasts, and to make macroeconomic forecasts , it is essential that we follow the Focus Bulletin .
Last week, I wrote about what the Focus Bulletin is for. If you missed this article, click here to read it . But still, the question remains:
Does the Focus Bulletin get more things right than it gets wrong?
To begin our investigation, we must download the Focus Bulletin for December 2022 to check what its economic forecasts were for that year.
Image: Focus Bulletin of December 16, 2022. Source: BACEN.
As we can see, the projected inflation for 2023 in December 2022, exactly one year ago, was 5.17%, while this year's inflation is about to close at 4.50%.
Brazil's GDP was expected to grow 0.79%, while this year's GDP , which is also awaiting confirmation, is expected to close at 2.92%.
The exchange rate in December 2022 was expected to close at the end of 2023 at R$5.26, while the current exchange rate is R$4.95.
Image: Dollar on 12/18/2023 source: Google.
The Selic projected for December 2023, at that time in December 2022, was 11.75%. Therefore, the Focus report in December last year managed to get the interest rate projection for the Brazilian economy exactly right.
As we can see, we had positive surprises with inflation remaining below what was projected, the exchange rate appreciating more than estimated and the economy still growing at 2.9%, well above the 0.79% projected . Selic also did not disappoint and was reduced throughout 2023, as highlighted by the Focus report of December 16, 2022.
You may believe that economic forecasts are most of the time wrong and therefore of no use. However, this is not exactly how we read or interpret these reports. All you have to look for is the trend and direction of economic data , understanding whether that movement will be positive or negative for your business. Forget about the accuracy of the numbers, as that is not the point of the Focus report.
Remember that in this market you don't have to be right to make money , as long as you are less wrong than other competitors in the market.