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Brazil Central Bank’s Survey Shows the Industry’s Upbeat Mood

Prospects for industrial growth have been looking up for three weeks, according to expert forecasts reflected in the Central Bank’s (BC) weekly survey on trends in the chief economic indicators.

From the perspective of the market analysts and financial institutions interviewed by the BC on Friday, July 15, industrial production is expected to grow 4.40% by the end of the year, compared with last week’s 4.29% projection. The outlook for next year remains unchanged at 4.50%.


There is a significant hike in the survey’s projection for this year’s trade surplus (exports minus imports), from US$ 35.95 billion to US$ 36.45 billion. US$ 30 billion is the surplus estimated for 2006.


The survey also indicates higher expectations regarding the external current accounts surplus, which includes all of the country’s commercial and financial flows, except interest payments on the debt.


The experts calculate that this year’s surplus will amount to US$ 10 billion, instead of the US$ 9.50 billion predicted in the previous survey. US$ 4 billion is the surplus projected for 2006.


According to the BC study, there was no change in expected GDP (Gross Domestic Product) growth this year, which should be 3% (3.50% in 2006), nor in the prospects for inflows of foreign direct investments, which should come to US$ 15 billion (US$ 15.31 billion in 2006).


The outlook for reductions in the government’s annualized benchmark interest rate (Selic) also remains unchanged, from its current level of 19.75% down to 18% by the end of 2005 and 15.75% by December, 2006.


Once more, however, forecasts were lowered for the year-end exchange value of the American dollar, from R$ 2.60 last week to R$ 2.55. For the end of 2006, the forecast continues to be US$ 2.80.


ABr – www.radiobras.gov.br

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