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The decline in business investments, in Brazil, in consequence of high market interest rates, is having a negative impact on growth prospects for the Gross Domestic Product (GDP), which represents the sum of all wealth produced in the country.
This is reflected in the Focus Bulletin, released yesterday by Brazil's Central Bank (BC). According to the market analysts who were interviewed, the forecast for this year's growth is just 3.10%, compared with 3.12% in last week's survey. For GDP growth in 2006, however, the expectation of 3.50% is maintained.
The BC poll, conducted last Friday, June 17, with a hundred analysts and financial institutions, indicates, on the other hand, a slight week-to-week improvement, from 4.14% to 4.22%, in projections for growth in industrial production.
This, together with the exchange rate forecast, down once again, was the only significant change in the trends charted for the major economic indicators.
The Focus Bulletin lowered its estimate of the year-end quotation of the US dollar from R$ 2.67 to R$ 2.65, in 2005, and from R$ 2.85 to R$ 2.80, in 2006.
The financial analysts stayed with their forecast that the government's annualized benchmark overnight interest rate (Selic), which now stands at 19.75%, will end this year at 18%, but they raised their forecast for next year's Selic, which they now think will end the year at 15.63% (compared with last week's prediction of 15.50%).
The other indicators remain unchanged: a US$ 35 billion trade surplus (exports minus imports); a US$ 9.20 billion current accounts surplus (all foreign commercial and financial transactions); and US$ 15 billion in foreign direct investments.
The Focus Bulletin also maintained its previous projections for the ratio between net government debt and the GDP. The debt should amount to 51.40% of the GDP at the end of this year and 50.50% at the close of 2006, according to the experts' predictions.
For the fifth week in a row, the survey lowered its estimate for this year's inflation. The average estimate among the experts who were polled is for the National Broad Consumer Price Index (IPCA) to total 6.16% this year, down from last week's figure of 6.21%.
The IPCA, which serves as a parameter for the official targets, is expected to end this month at 0.30%, with the possibility of hitting 0.55% in July, lower, therefore, than the estimates gathered in the previous survey, which projected 0.33% for June and 0.57% for July. The forecast for the IPCA in the coming 12 months was also lowered, from 5.11% to 5.07%.
ABr - www.radiobras.gov.br
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