Fundação Getúlio Vargas (FGV), a Brazilian institution renowned for its academic research and education, plays a significant role in providing crucial economic data through its production of various financial indices. These indices are widely used by economists, investors, policymakers, and businesses to understand current economic conditions, predict future trends, and make informed decisions.
Several key financial indices are calculated and published by FGV. Among the most prominent are:
- Índice Geral de Preços – Mercado (IGP-M): This is arguably the most well-known and utilized index produced by FGV. The IGP-M, or General Market Price Index, measures the overall price level in Brazil. It’s a composite index, calculated as a weighted average of three other indices: the Wholesale Price Index (IPA-M, 60%), the Consumer Price Index (IPC-M, 30%), and the National Civil Construction Cost Index (INCC-M, 10%). The IGP-M is published monthly and is frequently used to adjust contracts, particularly in the real estate market and for utility services. Its sensitivity to wholesale prices makes it a good indicator of inflationary pressures in the production chain.
- Índice de Preços ao Consumidor – Brasil (IPC-BR): The IPC-BR, or Brazilian Consumer Price Index, measures the average price variation of a basket of goods and services consumed by families with income ranging from 1 to 33 minimum wages in thirteen Brazilian capital cities. This index provides insights into the cost of living for a significant portion of the Brazilian population and is often used to assess the impact of inflation on household budgets. FGV publishes the IPC-BR monthly.
- Índice Nacional de Custo da Construção – Mercado (INCC-M): The INCC-M, or National Civil Construction Cost Index, tracks the evolution of costs in the civil construction sector. It considers expenses related to labor, materials, equipment, and services. This index is crucial for companies in the construction industry, real estate developers, and investors, as it helps them monitor cost fluctuations and make informed decisions regarding project budgets and profitability. It also factors into the IGP-M calculation.
- Índice de Confiança da Indústria (ICI): This index measures the confidence level of entrepreneurs in the industrial sector. It is based on surveys that assess the current and future perspectives of business leaders regarding various factors such as demand, production, employment, and inventories. The ICI serves as a leading indicator of industrial activity and can help predict future economic growth.
- Índice de Confiança do Consumidor (ICC): Similar to the ICI, the ICC, or Consumer Confidence Index, gauges the optimism or pessimism of consumers regarding the economy. It is based on surveys that explore consumer attitudes towards their personal financial situation, employment prospects, and purchasing power. The ICC is a valuable tool for understanding consumer behavior and predicting future spending patterns.
These indices, among others produced by FGV, provide valuable data for understanding the Brazilian economy. Their credibility and widespread use stem from FGV’s rigorous methodology, independent research, and transparency in data collection and analysis. These indices not only inform domestic economic activity but also provide insights for international investors interested in the Brazilian market.