Brazil’s economic operation may be in bonkers at the moment. However, policymakers are optimistic that this will not linger any longer. During its latest forecast, the country asserted that inflation would hit or even get past the government’s target by this month or in July.
Before an online event earlier on Wednesday, a senior official said that prices have begun to pick up in May. It hit an annual rate above 8%. This is the highest number so far in the last five years. Experts noted that the unprecedented recovery came largely from fiscal policy reformations and monetary resilience adopted amid the pandemic.
For the record, South America’s biggest economy contracted by 4.1% in 2020 as the virus managed to take on the driver’s seat.
For this year, economists expect the country’s gross domestic product to expand by an annual rate of 3.7%. Another 2.5% hike forecast has been placed on the line for 2022.
However, the path towards recovery will never be linear. Currently, the total number of inoculated citizens rests only 11% of the total population. This is quite behind its developed nations neighbors. The United States is nearing the 50% mark in the total number of vaccinated citizens.
On a positive note, the government recently updated plans to receive 3 million doses of the vaccine from Johnson and Johnson.
Meanwhile, Brazil’s agriculture sector is not behaving at its best self. Earlier, it declared its first drought alert for the first time in years.
According to experts, the recent update might signal that the Central Bank of Brazil is adamant about its rate hike promise through next month.
Currently, the monetary regulator upgraded its interest rate to 3.5% during its May 5 meeting.
People’s Bank of China Lukewarm on Target
In Asia, the region’s most powerful economy is lukewarm on its consumer price target. In a recent update, the People’s Bank of China forecasted that annual inflation would sit below 2% for this year.
The PBOC also warned of the possibility of inflationary or deflationary occurrence during the remaining months of the year.
This is due to the ongoing uncertainty in the country’s macroeconomic policy and the pressures from global trade in itself.
The central bank’s focus is on the government’s development goals, particularly on China’s transition towards green development.
With this, the PBOC asserted support for such a scheme. It did this by diverting away from making drastic changes in its monetary policy.