Once Again Brazilian Businessmen Lower their 2012 Growth Expectation. Now to 2.05%

    Brazilian growth

    Brazilian growth The Brazilian Central Bank’s weekly survey of financial institution and market sentiment, the Focus report, found that for the seventh consecutive week, estimates for inflation, as measured by the Broad Consumer Price Index (IPCA), fell slightly, from 4.95% to 4.93%.

    The market forecast for 2013 remains steady at 5.5%. It should be pointed out that both estimates are above the target of 4.5% set by the administration. However, there is wiggle room as the core target comes with a plus or minus two percentage points.

    The international financial crisis has also led the market to lower its estimates for GDP growth. In the latest Focus survey, the market forecast was for growth of 2.05%, down from a prior estimate of 2.18%. For 2013, the forecast is for growth of 4.2%.

    Meanwhile, the Central Bank also lowered its growth estimate for this year from 3.5% to 2.5%. However, the Ministry of Finance says it continues to expect GDP growth this year of more than the 2.7%.

    At the same time, the Focus report found that the market forecast for the country’s benchmark interest rate, the Selic, is for it to close out the year at 7.5%. At the moment, it is 8.5%, the lowest it has been since records began in 1999. The market forecast is for the Selic to rise to 9% at the end of 2013.

    Industrial production in May was down 0.9%, compared to April. That is the third consecutive month-to-month decrease. Compared to May 2011, the fall was sharper: down 4.3%.

    According to the government statistical bureau (IBGE), for the year, January to May, there is now a cumulative drop in industrial output of 3.4%.

    Moody’s

    The director of Economic Policy at the Central Bank, Carlos Hamilton Araújo, says that the lowering of the risk classification of eight Brazilian banks by Moody’s Investor Service was not a sign that there were problems in Brazilian financial institutions.

    Araújo noted that the adjustment was a generalized procedure to make the risk rating of banks adequately reflect their relationship to sovereign ratings (that is, the risk rating of the governments of the countries the banks operate in and the bonds of those governments).

    “The Moody’s report does not raise any concerns about the health of Brazilian banks,” declared Araújo.

    Moody’s Investor Service downgraded eight Brazilian banks on June 27 in what is described as a technical adjustment following a classification revision that began in February. According to Moody’s a new classification was necessary because the institutions had a higher rating than the Brazilian government.

    The banks affected are Banco do Brasil, Safra, Santander, HSBC, Bradesco, Itaú, Itaú BBA and Votorantim. The reasoning is that as the banks all have Brazilian government debt bonds (Dívida Pública Federal) in their portfolios, their exposure to risk had to be altered.

    “Our analysis indicates that there is little or no reason to believe that these banks will be insulated from a government debt crisis,” says the report from Moody”s.

    A similar revision has occurred in other countries where banks had better ratings than their governments.

    ABr

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    Brazilians Believe They Have Asian Tiger Blood

    In a recent trip to  New York, to participate at the “Brazil & Partners: Investment Opportunities” ...

    Trying to Make Brazilian Cachaça a Household Word in the US

    If the thought of another brand of vodka is enough to make you want ...

    Brazil Takes the Lead on Wind Energy in Latin America

    The largest wind energy park in Brazil and one of the greatest in the ...

    IMF Praises Brazil’s Bolsa Famí­lia and Forecasts 4.3% Growth for LatAm

    Latin America and the Caribbean are forecasted to expand 4.3% next year following this ...

    Being Gay Is Enough to Get you Beaten Up in Brazil

    A new incident involving attacks to homosexuals in Brazil have once again made headlines ...

    Brazilian House of Representatives

    By Almost Doubling Their Salaries Brazilian Congress Demoralized Democracy

    Eduardo Bueno is a well-known Brazilian historian with the rare quality of also being ...

    Brazil Can Save US$ 600 Million in 5 Years by Copycating Patented AIDS Drugs

    Brazil has the developing world’s most successful AIDS/HIV treatment and prevention program. Its operation ...

    The Sublime Madam

    Eny Cezarino, arguably was Brazil’s most famous and powerful courtesan ever. Her Casa de ...