Now, 0.48. For 15th Week in a Row Banks Lower Forecast for Brazil Growth

    Brazilian currency, the real

    Brazilian currency, the real Financial institutions’ projection for Brazilian economy growth, this year, remains in a downward spiral. For the 15th consecutive week, the survey conducted by the Brazilian Central Bank (BC) shows a smaller growth.

    This time, the projection for the growth of the Gross Domestic Product (GDP) has been moved down from 0.52% to 0.48%. For 2015, the estimate remains at 1.1%.
    These projections are part of a weekly poll of financial institutions conducted by the BC, regarding the main economic indicators.
    On the 29th, the Brazilian Institute of Geography and Statistics (IBGE) announced that the GDP showed a drop of 0.6% in Q2 from Q1, the second consecutive fall.
    The financial institutions’ estimate for industrial output downturn moved from 1.70% to 1.98%, this year. For 2015, the growth projection declined from 1.70% to 1.50%. The trade surplus projection (i.e. exports exceeding imports) has been moved from US$ 2.17 billion to US$ 2.41 billion, this year, and from US$ 8 billion to US$ 8.5 billion, next year.
    The forecast for the negative result in current account transactions (Brazil’s purchase and sale of goods and services abroad) has been adjusted from US$ 81.8 billion to US$ 81.2 billion, for this year, and has been maintained at US$ 75 billion, for 2015.
    The Foreign Trade Chamber (Camex, in the Portuguese acronym) of the Brazilian Ministry of Development, Industry and Foreign Trade has extended tax exemption on methanol imports for an additional 180 days.
    Methanol is an input used in manufacturing biodiesel, industrial resins, additives and formaldehyde. The Camex’s ruling exempts imports from tax up to a maximum quota of 282,500 tonnes and enters into force as of October 3rd. The tax break had already been extended last March.
    Risk agency Moody’s changed this Tuesday, September 9, the outlook on Brazil’s government bonds from stable to negative.
    According to the agency, the change reflects the rising risk of low growth and worsening debt indicators. These factors may indicate a reduction in Brazil’s credit worthiness, says Moody’s.
    At the same time, the agency reaffirmed the risk rating on Brazilian bonds at Baa2, due to the country’s resilience to external financial shocks given its international reserve buffers.
    Last October, Moody’s downgraded Brazil’s sovereign debt rating outlook from positive to stable. Back then, the agency also kept the country’s investment rating at Baa2.


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