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2007 Forecast: Brazil Will Grow 3.4% and Export Record US$ 150 Billion

Driven by domestic consumption, the Brazilian economy should grow 3.4% in 2007. The growth should be led by industry, to expand by 4.2% next year, which is more than the 4% estimated for agriculture and the 2.4% estimated for the service sector.

The forecasts are presented in the document "Brazilian Economy, Performance and Perspectives," published on Tuesday, December 19, by the National Confederation of Industries (CNI). "The trends for 2007 point to a scenario of moderate acceleration in the Brazilian economic growth rate," according to the CNI survey.

The document states that the industrial sectors to achieve best performances in 2007 should be mining, with an estimated growth of 7.6%, and civil construction, with a forecasted growth of 5%.

"The processing industry should maintain a moderate growth rate, due to the persistence of appreciated exchange rates and the loss of competitiveness against foreign competitors," according to the survey. The processing industry should grow 3.3% in 2007. Family consumption is set to rise 3.7%, and investments 9.2%.

The growth in the world economy, especially in the United States and China, is expected to keep foreign trade going strong in 2007. Given the favorable foreign scenario, Brazilian exports should increase 5.7% in 2007, to reach a record high of US$ 150 billion. The forecast is from CNI technicians.

The document states that the rise in imports is expected to be around 15%, amounting to US$ 107 billion. Given that, the estimated trade balance surplus for 2007 is US$ 43 billion, less than the US$ 45.5 billion forecasted for this year.

In the survey, the CNI technicians claim that the weak dollar will remain as the main obstacle for Brazilian exporters in 2007. The dollar is estimated to be worth 2.25 reais (the Brazilian currency) towards the end of next year, against an average of R$ 2.18 in 2006.

But the depreciation of the dollar against the real should be compensated, in part, by an increase in international prices for Brazilian commodities. In the accumulated result for the last 12 months, up until October, prices have increased 12.4% and accounted for 72% of the increase in Brazilian exports.

During the same period, the foreign sales volume increased only 5.3%, much less than the 11.6% recorded in 2005 and the 17.6% in 2004. "In 2007, lower growth rates are expected from exports," according to the CNI survey.

On the other hand, the depreciation of the dollar against the real will stimulate exports. Imports will also rise, driven by domestic consumption.

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  • Show Comments (3)

  • ch.c.

    To guest….the idiot !!!!!
    1) comparing a developed country to a developing country doesnt make any sense at all folr the economic growth….except for idiots
    2) why dont you compare the economic growth rate of Brazil, with the BRIC, all Latam and all the world developing nations ! That would be smarter….in my view. It happens that wherever you look at….BRAZIL IS LAST !
    3) For a second year in a row, within LATAM & Caribean countries, Brazil is second to last…just before HaÀƒ¯ti….on the economic growth rate. But HaÀƒ¯ti is NOT a developing country…it is a LDC or in the Least Developed Countries category. That effectively is not glorious for your analysis and country ranking.
    4) Use the stats on whatever time frame you chose and Brazil remain at the queue…at or neat the bottom !!!!!

    5) And …the idiot Guest……did you not know that the USA have increased their rates 17 times…to volontary slow the economy…..as it increased by over 3,5 % for over 15 consecutive quarters….which was not the case of Brazil….they just reduced their interests rates for the 12th time in a year to increase their economic growth rate….and still fail to do so !!!!!!!

    6) But if it pleases you to compare the USA and Brazil, please do so but not in 1 quarter only. Do it in a 1, 2, 3 or 4, 5 or 10 year time frame. And you will find out….if you can do so…that the maturing country is beating the “apparent” developing country that Brazil is…..hands on !!!!!!

    May I suggest you to review your economic sources and go back to basic economic school. Taking a basic maths course would be also helpful for your future !

    You may as well read the other article on that subject in this site dated December 20 with the headline :
    Brazilian Industry Tired of Growing Slower than Rest of the World !!!!!!!!!!!!!

    Stop watching your TV soap operas…they are not good for your economic health !!!!!!

  • guest

    Not only in Brazil
    DJ DATA SNAP: US 3Q GDP Even Slower As Housing Slumps
    WASHINGTON (Dow Jones)–The U.S. economy was a bit weaker last summer than earlier believed as the sharpest housing sector slump in 15 years took an even bigger toll on the slowest quarterly growth of 2006.
    ===================================================================
    Gross domestic product rose at a 2.0% annual rate July through September, revised down from a previous estimate a month ago of 2.2% for the third quarter, the Commerce Department said Thursday.
    The department said the revision to GDP, a measure of all goods and services produced in the economy, mainly reflected a downward adjustment to consumer spending.
    Another GDP component that was lowered was residential fixed investment, which plunged 18.7% in the third quarter instead of the previously reported 18.0%. Housing is bogging down the economy, which grew at a faster, 2.6% rate in the second quarter and 5.6% pace in the first three months of 2006. The 18.7% drop in residential fixed investment – the sharpest since a 21.7% drop in first-quarter 1991 – translated to a cut of 1.20 percentage points in third-quarter GDP; the estimate a month ago of an 18.0% decline had reduced GDP by 1.16 percentage points. Second-quarter residenital fixed investment dropped by 11.1%.
    Gauges measuring third-quarter inflation were either raised slightly or left alone, according to Thursday’s data revisions. Corporate profits after taxes were revised lower.
    Wall Street had expected no revision to third-quarter GDP; the median estimate of 21 economists surveyed by Dow Jones Newswires was a 2.2% increase.
    The biggest component of GDP is consumer spending and it was revised lower. Third-quarter spending by consumers rose 2.8%, down from a previously reported 2.9% increase but above the second quarter’s 2.6% advance. Consumer spending accounts for the lion’s share of economic activity – about two-thirds. It contributed 1.96 percentage points to GDP in the third quarter; the previous estimate was a contribution of 1.99 percentage points.
    Services spending climbed 2.8%; previously, Commerce said services spending rose 3.1%.
    Consumer purchases of durable goods rose 6.4% in July through September, above the previously reported 6.0% increase. Durables dipped by 0.1% in the second quarter.
    Durable goods are expensive items designed to last at least three years, such as cars.
    Third-quarter non-durables spending increased by 1.5%.
    Businesses increased inventories by $55.4 billion in the third quarter; earlier, Commerce estimated a $58.0 billion increase. Companies had lifted stocks $53.7 billion in the second quarter.
    The accumulation of goods added 0.66 percentage point to third-quarter GDP. Previously, Commerce said inventories added 0.16 percentage point from GDP.
    Real final sales of domestic product, which is GDP less the change in private inventories, climbed 1.9%, below the earlier estimated 2.1% increase. Second-quarter sales rose 2.1%.
    International trade caused slightly less of a drag on GDP, as exports climbed more than earlier thought, according to the revised data. U.S. exports rose by 6.8%. Imports increased 5.6%. Originally, exports were seen up 6.3% and imports 5.3% higher. So, trade reduced GDP by 0.19 percentage point; previously, Commerce said trade cut third-quarter GDP by 0.21 percentage point.
    In the second quarter, exports had gone up by 6.2% and imports climbed 1.4%.
    Businesses increased third-quarter spending an unrevised 10.0%. Business spending rose 4.4% in the second quarter. Third-quarter investment in structures surged 15.7%. Equipment and software increased 7.7%.
    Federal government spending increased by 1.3%, revised down from a previously estimated 1.5% increase. Second-quarter spending fell 4.5%. State and local government outlays increased 1.9%.
    The government’s price index for personal consumption increased at an unrevised 2.4%, which was below the second quarter’s 4.0% rise. The PCE price gauge excluding food and energy increased at an unchanged 2.2%, below the second quarter’s 2.7% rise.
    The price index for gross domestic purchases, which measures prices paid by U.S. residents, rose 2.2%, higher than the previously estimated 2.1% climb but well below the second quarter’s 4.0% rise.
    The chain-weighted GDP price index rose 1.9%, higher than the previously estimated 1.8% climb but below the second quarter’s 3.3% rise.
    Corporate profits climbed 4.2% to $1.163 trillion in July through September from the second quarter, the report showed. That was a revision down from an originally reported 4.6% increase. Profits in the second quarter increased 0.3%. Year over year, profits surged 31.0% since the third quarter of 2005.

  • ch.c.

    except that…..
    …every year you have the same scenario and vision : rosy projections for the following year.
    And reduce them after mid year…..due to your bad policies !

    And this despite you have cut 12 times (and more to come) your interests rates !!!!

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