A Bullish Brazil Betting on 4.2% Growth for 2007

A truck in Brazilian road The National Confederation of Industries (CNI), an organization that represents Brazilian industry, forecasts growth of 4.2% in the country's Gross Domestic Product (GDP) in 2007. The GDP is the market value of all final goods and services produced within a country in a given period of time.

This figure shows greater optimism by Brazilian industry, as the previous forecast, disclosed at the end of 2006, was for growth of 3.4%.

According to a statement published by the organization, the CNI gives two reasons for the 0.8 percentage point increase: the country economy presenting greater dynamism than expected in the first quarter and a change in the calculation methodology used by the Brazilian Institute for Geography and Statistics (IBGE).

According to the CNI, the economic growth will be sustained mainly by expansion of domestic demand, which should grow 5.8%. All the components of domestic demand, like family consumption and government consumption, should grow above the GDP average in 2007.

Family consumption should be 5.2% greater, according to the CNI. This is explained by the improvement of credit conditions and by the expansion of income, be it due to salaries, be it due to social benefits. In the organization's forecasts, government consumption should grow 4.4% this year.

Industry, however, should expand less than the rest of the economy, according to evaluations by the organization. At the end of 2006, the CNI forecasted that the sector's GDP would grow 4.2% in 2007.

Now, the organization believes that industrial growth will be 4%. The organization's economists evaluate, however, that this GDP performance is weak, caused mainly by low domestic savings.

Optimistic Executives

Industrial executives in Brazil remained optimistic in April regarding the growth in Brazilian industrial activity. The information was taken from a market prospect survey conducted by the National Confederation of Industries (CNI).

The Industrial Entrepreneurs' Confidence Index (ICEI), disclosed today, April 23, by the organization, reached 59.4 points this month. According to the methodology, values above 50 show optimism.

The industrial sectors showing the higher level of optimism are those of alcohol (67.4 points), pharmaceutical (63.8 points), automotive vehicles (63.3 points) and hospital and precision equipment (63.2 points).

The only two sectors placed below 50 points, i.e., which are pessimistic, are those of wood and shoes. The index for the shoes industry was 46.9 points. That of the wood industry was even worse, at 46.5 points

Anba

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