Brazil: Businesspeople forecast higher inflation and lower growth this year

10 July 2008

Sao Paulo, Brazil, 10 July – The National Confederation for Industry (CNI) which represents Brazilian businesspeople, Wednesday lowered its forecast for economic growth this year, from 5.0 percent to 4.7 percent.

The CNI also raised its forecast for Brazil’s inflation from 4.7 percent to 6.4 percent, at the top of the government’s official forecast, specifically because of the rise in food prices.

The economic growth rate will be negatively influenced by the rise in inflation and interest rates, with the adoption of a more restrictive monetary policy, according to a statement.

Brazil’s base interest rate, which recently rose to 12.25 percent per year, due to concerns about inflation, is expected to reach 14.25 percent by December.

With one of the highest interest rtes in the world, Brazil is expected to continue attracting foreign investment, which is favourable for the valuation of the country’s currency, the real, currently at its lowest rate against the dollar for the last nine years.

The value of the real favours a rise in imports, which are expected to total US$170 billion, reducing the country’s trade surplus to US$20 billion, with exports of US$190 billion. (macauhub)