Brasília, July 7, 2003 (Agência Brasil - ABr) - The financial market remained pessimistic about the prospects for economic growth this year and reduced its forecast for the GDP (Gross Domestic Product) from 1.75% to 1.70%, according to the Central Bank's (BC) weekly survey, released today.

This was the fifth straight week in which expectations for inflation in 2003 fell, in terms of the index used by the government to set its targets. Projections for the IPCA (Broad Consumer Price Index) declined from 6.98% to 6.75%. Expectations also improved, to a somewhat greater degree, for all the other indexes of inflation considered in the BC's weekly survey. However, predictions for the prime rate (Selic), which currently stands at 26% per year, remain at 21% for the end of the year.

The estimates also indicate a reduction in the ratio between the net public sector debt and the GDP, from 55% to 54.90%. As far as foreign accounts are concerned, the forecasts point to a reduction in the current account from US$ 3.60 billion to US$ 3.50 billion. Even though the forecast for foreign direct investments continues to be US$ 10 billion, the market is betting on a trade surplus of US$ 17 billion in 2003.

The Ministry of Development, Industry, and Foreign Trade informed this morning that, through the first week of July, the trade balance surplus has risen to US$ 10.744 billion. (DAS)