Market improves GDP forecast
O Estado de S. Paulo
Analysts are more optimistic with the perspectives for the Brazilian economy in 2009. On a weekly survey made by the Brazilian Central Bank (BC), the financial market improved the forecast for the Gross Domestic Product (GDP), which went from a contraction of 0.50% to a 0.34% fall. For 2010, the expectation of recovery of the activity was maintained with bet of growth of 3.50%.
With regard to inflation, however, the forecasts are more pessimists. The expectation of a high in the Extended Consumer Price Index (IPCA) was increased for the second consecutive week. It went from 4.42% to 4.50% in the middle of the inflation goal for the year. This is the index used by the BC for the taking of monetary policy decisions. The higher the increase of the prices, the lesser is the space for the cut in interests.
The forecast the interests should fall only one more time in 2009 was maintained. In accordance with the scenario outlined by the analysts, the Selic (Special system for settlement and custody) rate should be reduced by 0.50 percent point in the next meeting, in July 21 and 22, what would take the interest rate to 8.75%. In the following months, the rate should remain stable until, at least, the end of the year.
The estimates for 2010 was also affected. In the survey, the expectation of inflation for next year increased from 4.33% to 4.40%. The head economist of the ING Bank, Zeina Latif, told Agência Estado that it happens because the level of inflation increased more than the expected in June - month in which there was a 0.36% increase, above the 0.30% forecasts. Also, the expectation the price of gasoline shall not fall and that the economy will continue under recovery prevails.