CNI increases growth forecast in 2010 to 6%
O Estado de S. Paulo
The heated economic activity early this year caused the National Confederation of Industry (CNI) to review its growth estimates for this year upwards. The entity estimates the Gross Domestic Product (GDP) will grow 6% in 2010, compared to the 5.5% forecast made last December. The industry, heavily burdened by the crisis is 2009, is the sector that will feature a more intense recovery.
The Industrial GDP shall increase 8%. Prior to that, the forecast was at 7%. The rate of investment in the economy also took a leap from 14% to 18%. "We began the year very strong, and that's the reason for the review upwards", said the economist of the CNI Marcelo Azevedo. But, as the same time as there are growth forecasts for the GDP above 7% this year, the CNI has chosen to adopt a more conservative estimate because of the interest rate. "The change in the monetary policy will affect the industry as it will reduce the access to credit."
The effects of the increase of the cost in the financing will be more visible in the second half. According to Azevedo, the first months of the year were strong because they reflect the recovery from the crisis. The tendency, he believes is to have the rate reduced. "We believe in strong recovery, but it shouldn't sustain until the end of the year". In spite of it, the activity will be above the expected at the end of 2009. Household consumption, which drove the growth in recent years, shall grow 6.2% compared to the previous estimate of 5.6%. The projection of the rate of unemployment was reduced from 7.6% to 7.2% at the end of the year.
The new figures of the CNI already take into account the cut of R$ 10 billion (US$ 5.7 billion) in the federal expenditure announced last week by the Minister of Finance, Guido Mantega. The assessment is that the cut will not be enough to prevent the increase in the interest rate. According to the estimate made by the entity, the base rate should get to 11% at the end of this year, compared to an estimate of 8.75% in December. The restriction on the expenditure will not prevent the deterioration of the result of the public accounts either. The CNI increased the projection of the negative balance in the nominal concept, which takes into account the expenditure with interest, from 1.9% to 3.05% of the GDP. This way, the public debt will get to 41.8% of the GDP, compared to 40.5% of the GDP estimated before.