|
Real stability
sustained.
Since the end of May the Real has shown a clear trend
towards strengthening and has appreciated 2.9%, closing July at 1.77 Reais
to the US$. Strong foreign
direct investment (FDI), which in June alone reached US$ 3.6 billion, more
than compensated the weakening tendencies instigated by the interest rate
declines. The strong foreign
direct investment inflows from January through June (US$ 13.1 billion)
have also comfortably financed the current account deficit of US$ 12.5
billion for the same period. The
current strength of FDI can be attributed to the growing interest of
international investors roused by healthy growth prospects.
Trade balance still healthy.
According to the most
recent data release from the Secretary of International Trade, the
annualised trade balance surplus reached US$ 349 million in July, a
substantial improvement from the US$ 5.2 billion annualised deficit
registered in the same month last year. In July, annual exports reached US$ 56.7 billion, 9.6% above last
year's levels. Annual imports, on the other hand, contracted 1.1%.
Export growth continues to be strong even though prices on key
agricultural export commodities have been less favourable than expected.
Nevertheless, Consensus Forecast participants remain optimistic
about the prospects for continued strong export growth.
However, higher oil prices and the recovery in aggregate demand as
a result of more favourable economic conditions has also led to a rebound
in imports, which has prompted panellists to revise their import
forecasts. While in last
month's survey imports were expected to continue contracting this year,
participants now expect imports to remain at the same levels as last year.
Note:
The above text is an abridged version of the LatinFocus Consensus Forecast
briefing on Brazil. For more details please click here.
|
