• Categories
  • Archives

Central Bank Forecasts Brazil’s GDP Will Grow 5.8% in 2010

Brazil's pre-salt oil Brazil's Gross Domestic Product (GDP) will grow 5.8% in the coming year. The projection was made by the Brazilian Central Bank and was issued this Tuesday, December 22, on the Inflation Report for December.

Family consumption in Brazil should also rise by roughly 6% next year. The document of the Central Bank informs that economic activity in the country should see a gradual resumption, sustained by domestic demand alone.

Industry will be the driving force behind Brazilian growth. The sector should expand by 7.6% in 2010, after a 5% retraction this year. The highlight is the processing industry, which should grow by 8.8%. Civil construction should increase by 6.4%.

The various projects of the federal government Growth Acceleration Program (PAC) are going to be one of the drivers of the productive activity in 2010.

Another industrial sector for which there are good projections is the extraction industry, which should grow by 6.4% next year, driven by oil and perspectives of success in pre-salt layer drilling. Water, gas and electric power distribution should increase by 4.8%, according to the monetary authority.

The services sector has an estimated growth rate of 5%, driven by the financial sector (7.2%), as a result of continuing credit expansion. The Central Bank estimates that trade should grow by 6.5%, and transport, storage and the postal service, by 6.4%. Information services should expand by 6.5%.

The prospect for agriculture is not so good, according to the Central Bank document. Due to the crisis, not only in Brazil, but also in the rest of the world, the agricultural sector should grow 3.7%.

Labor market

According to the Central Bank report, family consumption should increase by 6.1% in 2010, a trend in keeping with labor market recovery and the stabilization of inflation rates. Government consumption, in turn, is projected to grow by 2.9%, as a result of which domestic demand should account for 6.9% of the total GDP.

The foreign sector, however, will have a negative contribution again in 2010, at 1.1%, even though both exports and imports are expected to grow.

Government revenues should increase in 2010, with tax revenues projected to go from zero growth this year to a 6.3% expansion next year.

As for investment measured by gross fixed capital formation, the Central Bank expects more-than-favorable behavior: growth of 15.8% in comparison with 2009, as opposed to a 9.9% reduction this year, compared with 2008.

Inflation

The inflation forecast for this year, measured by the Extended Consumer Price Index (IPCA), has increased from 4.2% to 4.3% in 2009, assuming a Selic rate (benchmark interest rate) of 8.75% and the United States dollar equivalent to 1.75 Brazilian reais. In 2010, according to the monetary authority, the inflation rate should be 4.6%.

In Brazil, a system of inflation targets is in effect, under which the Monetary Policy Committee (Copom) has to adjust the interest rate in order to meet a preset goal based on the IPCA.

For this year, 2010 and 2011, the central inflation target is 4.50%. There is, however, a 2% tolerance range, upwards or downwards. Thus, the IPCA may range from 2.50% to 6.50% without the target being formally missed. For 2009, the growth forecast has been lowered from 0.8 % to 0.2%.

Anba

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

Brazil Leaves Basic Rate at 10.75%, Hinting It Will Go Up in January

Brazil kept it benchmark overnight banking rate unchanged after curbs on credit allowed central ...

Sea Lovers’ Heaven

CDs or Books by Keyword, Title or Author By Brazzil Magazine Rio Grande do ...

Brazilian Police Get US$ 10 Million from the US

The government of the United States intends to contribute around US$ 9.863 million (R$ ...

The Best Pages of Our Lives

Which are the best books produced by the Brazilian literature this century? A panel ...

Brazil Opposition Torpedoes Plans for US$ 300 Million AeroDilma

The opposition in Brazil has criticized the purchase of a new presidential aircraft for ...

27% of Brazil’s Youth Do Nothing. They Neither Work Nor Study.

About a quarter of Brazilians in the 15 to 24 age group neither work nor ...

Brazil’s Drag Queen, the Toast of New Zealand, Stars in Own Play

Color, style, laughs, maybe some tears, live singing, lots of fun and glamour is ...

Brazilians Meira and Castroneves Shine at Dramatic Indy 500

Seven Brazilians had qualified for the Greatest Spectacle in Racing, three in the first ...

Meet Blue Granite, a Rare Charmer from Brazil

When he founded his company, Ferraz Brasil, Marcelo Ferraz had the aim of selling ...