Brasília, 3/29/2004 (Agência Brasil) - The Central Bank's weekly market survey, Focus, found that pessimism continues with regard to GDP growth this year. Estimates have now fallen for five straight weeks and in the latest survey was 3.50%, down from 3.54% the week before. The gradual decline in estimates for GDP growth this year have spread to estimates for growth next year as well, with the estimate for 2005 GDP growth going from 3.71% to 3.70% in the latest survey.

Market forecasts for this month's inflation fell from 0.43% last week, to 0.42% in the latest survey

As for 2004 inflation, market estimates for the IPCA and the IPC-Fipe remained steady at 6% and 5.52%, respectively. But the forecast for state-monitored prices is for them to rise more than inflation: 7.2% in the latest survey, compared to 7% in the prior survey. The same is true of market estimates for wholesale prices as measured by the IGP-DI (now expected to rise 7.61% - up from 7.50% last week) and the IGP-M (expected to rise 7.51% - up from 7.38% last week).

On the other hand, market estimates for the 2004 trade surplus are bright. The forecast rose last week from US$23.15 billion to US$24 billion. Estimates for the current account surplus also rose: from US$330 million to US$400 million. And direct foreign investments also looked better, with the market forecast rising from US$12.10 billion to US$12.95 billion.

According to the market, this scenario occurs against a backdrop that includes a basic interest rate that closes out the year at 14% (today the Selic is 16.5%) and a dollar that does not rise above R$3.05.

Finally, with regard to the next Monetary Policy Committee (Copom) meeting on April 14, the market believes the Selic will be reduced to 16%. (translator: Allen Bennett)