2006 Brazilian GDP Downgraded to 2.74%

The latest release from the Brazilian Central Bank, based on private sector estimates, downgraded to 2.74% the 2006 GDP expansion. For 2007 the estimate among a hundred leading business men and analysts is that the economy will grow 3.5%.

Last Monday, President Lula da Silva on taking office for a second four year mandate promised to "unleash" Brazilian growth which is the lowest among the leading emerging countries

Inflation for 2006 was estimated in 3.11% and 4% for 2007, while the official Central Bank target is 4.5%. Private analysts also estimate that the basic lending rate in Brazil, Selic, currently at 13.25% should keep dropping to 12.31% next December.

Trade surplus in 2007 is expected to reach US$ 38 billion while the current account surplus in 2006 was US$ 13 billion and is estimated in US$ 6 billion for 2007.

Direct foreign investment in Brazil in 2006 was US$ 16 billion and should remain in the range of US$ 16.1 billion in 2007.

In 2006, Brazil had a record US$ 46 billion trade surplus, with exports reaching US$ 137.4 billion and imports US$ 91.4 billion. The 2006 surplus is 2.8% higher than the US$ 44.7 billion of 2005. Exports jumped 16.2% over 2005 and imports 24.2%.

The strong boost in imports is attributed to the strong real, which appreciated 8.1% against the US dollar.

However Brazilian exporters are pressing the Lula administration for strong measures to prevent the real from continuing its appreciation spree. The exports’ goal for 2007 is US$ 143.5 billion.

But in spite of the currency debate, strong demand from a world economy plus higher values for minerals and commodities have helped boost exports.

Mercopress

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