Brasília, November 24, 2003 (Agência Brasil - ABr) - The financial market's expectations continue to be favorable to the economy's good performance. The median estimate in the Central Bank's (BC) weekly survey of the country's chief banks and economic consultants indicates a falling tendency for inflation, which should close this year with the Broad Consumer Price Index (IPCA) at 9.23%. A month ago, the prediction was for 9.74%, and in last week's survey, 9.40%.
Besides the IPCA, which serves as a parameter for official rate adjustments, the other indicators accompany the falling trend, with the exception of the General Market Price Index (IGP-M), which rose from 8.49% last week to 8.53% this week, still in line with the official annual inflation target of 8.50%. According to the Focus Bulletin, the increase is due in part to the gradual reduction in administered prices (fuel, electricity, telephone services, and others), for which inflationary expectations fell from 13.60% to 13.47% over the course of the last month.
As an immediate result of the behavior of wholesale and retail prices, with the end of the inter-harvest period of agricultural production (foodstuffs), estimates for this month's inflation were also reduced significantly in comparison with the predictions made at the beginning of November: The IPCA, which was expected to grow 0.50%, is now expected to end the month at 0.38%. Last month the index amounted to 0.29%.
Expectations also improved in relation to the prime interest rate (Selic), predicted last week to end the year at 17.34%. But, following last Wednesday's decision by the Monetary Policy Committee (Copom), which surprised even the market analysts themselves, the current forecast is that the prime rate will be lowered to 17% at the meeting on December 16-17, Copom's last in 2003.
As for the trade balance, it is now expected to end the year with a surplus of US$ 23.50 billion, as against the US$ 23.13 billion forecast last week. As a result, prospects also improved for the current accounts surplus, which, from US$ 2.35 billion in last week's bulletin, rose to US$ 2.65 billion.
For its part, the prognosis for growth in the Gross Domestic Product (GDP) remains at 0.68% per annum, but the bulletin reveals an increase from 57% to 57.60% in the growth of net government debt (as a percentage of the GDP). For next year, the projection is for the GDP to grow 3;50%, as against the 3.40% in last week's survey. And the net debt/GDP ratio should fall to 56%, also according to the bulletin. (DAS)
