Following nearly three months in which forecasts crept up weekly, Brazil's
financial market now expects the IPCA (Índice Nacional de Preços
ao Consumidor AmploBroad National Consumer Price Index) to fall slightly.
Contrary to last week,
when the principal market consultants and analysts predicted that inflation
would amount to 7.20 percent this year, their current estimate reported in
the Focus Bulletin puts inflation at 7.16 percent, which is still far from
the government's official target of 5.5 percent.
This switch is mainly
a reflection of the more moderate rise in consumer prices in the capital of
São Paulo. So much so that the market's outlook for this month's IPCA
was maintained at 0.60 percent, lower than the 0.91 percent actually registered
On the other hand, the
estimate for September's IPCA suffered a slight elevation, from 0.51 percent
last week to 0.55 percent in the current survey. Inflationary expectations
for the next twelve months experienced a small decline, from 6.40 percent
to 6.18 percent.
At the same time that
inflation shows signs of abating, the figures for industrial production indicate
optimism over growth prospects. Last week's forecast of 5.76 percent annual
growth in industrial production was raised to 5.95 percent, and growth expectations
for this year's Gross Domestic Product (GDP) now stand at 3.92 percent, in
comparison with 3.57 percent one month ago and 3.79 percent last week. The
projection for GDP growth in 2005 remains unchanged at 3.50 percent.
The estimates for foreign
direct investments continue to be US$ 10 billion this year and US$ 13 billion
in 2005, according to the Focus Bulletin. The Central Bank, nevertheless,
is working with the figure of US$ 12 billion in terms of its expectations
for foreign investments in productive activities until the end of this year.
There was no change in
expectations regarding this year's exchange rate, which should end the year
at R$ 3.10 to the dollar, but the possibility of lower depreciation is foreseen
for the end of 2005, with the previous prediction of R$ 3.25 reduced to R$
The market is more pessimistic,
however, over the baseline interest rate (Selic), which is expected to remain
at the current annualized level of 16 percent for the rest of this year.
70,000 New Jobs
The level of employment
in manufacturing industries should grow 4 percent in 2004, according to a
new estimate by the Fiesp (Federação das Indústrias do
Estado de São PauloFederation of Industries of the State of São
If this prediction is
confirmed, it will mean the creation of over 70 thousand jobs this year. In
its previous estimate, the organization projected 3.5 percent growth, around
60 thousand new jobs.
"We should have three
more months of growth in the level of employment," affirms the Director
of the Fiesp's Department of Research and Economic Studies, Cláudio
He emphasizes that in
July's survey the growth base was amplified. "Domestic market sectors
showed growth, unlike the results for the other months, which were dominated
by the figures for exports," he said.
In his view the data indicate
a preparation for the end of the year. "Employment and income are growing.
So it is natural that consumption and the figures for the domestic market
are also growing," he remarked.
The level of employment
in the manufacturing sector in São Paulo rose 0.76 percent in July,
which means 11,756 jobs were created, according to Fiesp. That was the best
July result since 1994, when the survey began.
For the year there has
been a cumulative increase in São Paulo industrial sector jobs of 41,847,
an increase of 2.73 percent. For the last 12 months, the increase reached
Stenio Ribeiro works for Agência Brasil (AB), the official press agency
of the Brazilian government. Comments are welcome at firstname.lastname@example.org.
from the Portuguese by David Silberstein.