Brazil Survey: Analysts Again Raise '07, '08 GDP Forecasts

Aug 27, 2007 - Brazilian financial market analysts and economists raised their forecasts for the country's 2007 and 2008 gross-domestic-product growth, according to the central bank's weekly market survey, published Monday.

Analysts raised slightly their 2007 GDP expansion estimate to 4.64% from 4.62% in the previous survey. In 2006, Brazil's GDP grew 3.7%. This week's was the fourth-consecutive increase in GDP forecasts.

In the first quarter, Brazil's GDP grew 4.3% from the year-earlier period, as falling domestic interest rates and expanding credit led to a strong performance in the services sector.

In addition, financial analysts raised their 2008 GDP estimate to 4.40% from 4.35%.

The weekly central bank survey tracks the opinions of 100 analysts and economists from banks and brokerages, reporting the average of their expectations.

In the meantime, experts raised their estimates for 2007 inflation as measured by the official consumer price index, or IPCA, to 3.86% from 3.77%.

Despite the increase, the inflation projection remains below the central bank's inflation target of 4.5% for the year. The IPCA inflation rate reached 3.95% for the 12 months through mid-August, according to data from the Brazilian Census Bureau, or IBGE.

Experts maintained their 2008 year-end IPCA outlook at 4.0%.

In addition, economists kept their 2007 year-end Selic benchmark interest rate forecast at 10.75% and also maintained their outlook for the 2008 year-end Selic rate at 9.75%.

Currently, the base rate stands at 11.50%.

The estimate for the 2007 year-end debt-to-GDP ratio was kept at 43.5%.

Experts reduced their estimate for the 2007 trade surplus to $42.7 billion. In 2006, Brazil posted a record trade surplus of $46.07 billion.

The Brazilian real is expected to end 2007 at BRL1.9 to the dollar, analysts forecast. On Friday, the real closed at BRL1.942 to the dollar.