Stênio Ribeiro
Reporter - Agência Brasil

Brasília - According to the average expectation of market analysts, the official annualized benchmark interest rate (Selic), which currently stands at 16.50%, should decline to 14.25% by December. Every Friday they respond to a Central Bank poll about trends in the main economic indicators.

Four weeks ago the economists forecast that interest rates would fall to 14.50%, but, in view of three consecutive decisions by the Monetary Policy Committee (COPOM) to lower the rate by 0.75 percentage points, their optimism has been whetted for a bigger decrease. Already last week their forecast had dropped to 14.38%.

The results of the survey published today (27) in the Focus Bulletin show that the analysts continue to expect that the US dollar will be worth R$ 2.20 at the end of this year. Their prediction for the exchange rate at the end of 2007 is R$ 2.38, down from the R$ 2.40 that appeared in last week's survey.

As far as the economists see it, the market continues to maintain its course, without important variations. Except for a slight improvement in their forecast for the growth in industrial production, up from 4.11% to 4.21%. Even so, this has not altered their estimate of this year's growth in the Gross Domestic Product (GDP), the total wealth produced in the country, which has remained at 3.50% for 47 weeks. For next year, however, they lowered their estimate from 3.70% to 3.65%.

All the other indices for this year remain the same. The trade balance (exports minus imports) should end the year at around US$ 40 billion, and the current account balance, which includes all foreign commercial and financial transactions, should end up at US$ 9 billion. The inflow of foreign direct investments should total US$ 15 billion.

Translation: David Silberstein