Projection for Brazil’s Growth Shrinks Now to a Paltry 0.33%

Brazilian GDP is declining
According to estimates from financial institutions polled weekly by the Brazilian Central Bank (BC), the Brazilian economy should grow by 0.33% this year. Last week, the projection had stood at 0.48%. 

The estimate for Gross Domestic Product (GDP)’s growth has been reduced for the 16th consecutive week. For 2015, the projection has been revised down from 1.1% to 1.04%. As regards industrial output, the estimate is for a contraction of 1.98%, this year, and for a 1.5% increase in 2015.

The projection of financial institutions for the inflation rate, measured by the Broad Consumer Price Index (IPCA, in the Portuguese acronym), was maintained at 6.29%, both for 2014 and 2015.
The estimate is above the midpoint of the target (4.5%) and below the top end of range (6.5%).

The BC is entrusted with keeping the inflation rate within the target range and one of the tools used to influence the economic activity, and, consequently, inflation, is the benchmark interest rate, aka Selic.

The financial institutions’ projection for Selic, by the end of the year, has been maintained at the current level of 11% per annum. For the end of 2015, the projection was moved from 11.63% to 11.5% per annum. The projection for dollar price was adjusted from R$ 2.33 to R$ 2.30, by the end of 2014, and from R$ 2.49 to R$ 2.45, in 2015.

Surplus

In the second week of September, the Brazilian trade balance posted a surplus of US$ 57 million. According to data released this Monday, September 15, by the Ministry of Development, Industry and Foreign Trade (MDIC), between the 8th and 14th this month Brazil exported US$ 4.386 billion worth of products and imported US$ 4.329 billion.

Brazilian exports averaged at US$ 877.2 million per day, up 1.2% from the first week, while imports averaged at US$ 865.8 million, down 15.2% from the first week of the month.

According to the MDIC, the increase in sales in the second week from the first was driven by the growth in exports of basic products. Sales of crude oil, iron ore, soy beans and corn were up. Exports of semi-manufactured goods decreased due to lower sales of semi-manufactured iron and steel, leathers and hides, wood pulp and ferroalloys.

Basic goods sales were also lower in the second week than in the first week due to a contraction in sales of autos, auto parts and auto engines.

Imports were down for fuel and lubricants, mechanical equipment, autos and auto parts and steel products.

As per September’s partial trade balance results, in the first ten working days of the month, US$ 8.722 billion worth of products were exported, averaging at US$ 872.2 million per day. In the first two weeks of September, total exports were down 12.2% from the same period of last year.

Exports decreased across all three product categories in the first two weeks of September this year from the first two weeks of September 2013. Basic goods exports were down 11.5%, semi-manufactured goods exports were down 18.7% and manufactured goods exports were down 12.4%.

Higher imports

As regards imports, the situation is reversed. In the 10 working days through September 14th, Brazil imported the equivalent of US$ 9.436 billion, averaging at US$ 943.6 million per day, up 5.1% from the first two weeks of September last year.

Purchases of fuel and lubricants, pharmaceutical products, steel products and plastic and plastic products were up. Month-to-date in September, Brazil’s trade balance ran a US$ 714 million deficit.

Year-to-date, exports amounted to US$ 162.740 billion and imports, to US$ 163.207 billion. In the 176 working days of the year, the trade deficit ran at US$ 467 million. In the same period of last year, the deficit stood at US$ 2.836 billion.

Oil Tenders

The secretary of Oil and Gas of the Brazilian Ministry of Mines and Energy, Marco Antônio Martins Almeida, informed that the 13th round of tenders for oil and natural gas exploration has been confirmed for the first half of next year.

The tender will cover onshore and deep water exploration but there are no forecasts as to disclosure of the sites.

According to Almeida, the areas to be tendered are being assessed by the National Agency of Petroleum, Natural Gas and Biofuels (ANP, in the Portuguese acronym).

The agency’s CEO Magda Chambriard said the ANP has been working on the auction for a long time, and that it has submitted its studies to the Ministry of Mines and Energy and the National Energy Policy Council.

The secretary said some of the areas are being assessed by the Brazilian Environment Institute (Ibama), and that they are “extremely interesting” and “attractive.”

Confidence

Industrialists’ confidence is down 7.7 points this month from September 2013, reaching 46.5 points, announced the National Confederation of Industry (CNI, in the Portuguese acronym).

According to the CNI, the lack of confidence has lingered for six consecutive months, regardless of company size. When compared to August, the Industrial Businessman Confidence Index (Icei, in the Portuguese acronym) has remained at the same level, says the confederation.

The survey also shows that the index has remained at the lowest level since records began, in 1999. The survey’s index ranges from 0 to 100 points. Scores below 50 points indicate lack of confidence.

According to the CNI’s evaluation, the survey shows that the lack of confidence is widespread across all companies of all sizes. The Icei reached 46.7 points for small-sized businesses, 45.4 points for medium-sized businesses and 47 points for large-sized businesses.

ABr

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