The Brazilian industrial federation on Wednesday upped its 2013 growth forecast to 1.4% from 1% and its GDP growth projection from 2% to 2.4%. But, despite the better data, the National Confederation of Industry (CNI) urged caution. The improved economic outlook is no guarantee of a strong growth rate, it said.
This year, investment will play a larger role than household spending in terms of GDP growth, the statement added, forecasting an 8% rise in investment but only 1.9% in consumer spending.
CNI meanwhile projected that the year-end jobless rate would stand at 5.1%, trimming its initial forecast of 5.3%. Likewise CNI forecasts inflation closing the year at 5.8% down from a June estimate of 6% but still above the government target of 4.5%.
With inflation still showing signs of upward pressure, the CNI expects to the Central Bank to raise its current base rate of 9.0 percent to 9.75% by year's end.
Brazilian Finance Minister Guido Mantega believes the economy will grow 2.5% this year and 4% in 2014, when country expects a boost from hosting the World Cup. Last year, GDP growth came in at a paltry 0.9%, after 2.7% in 2011 and a sizzling 7.5% in 2010.
In related news Brazil posted a current account deficit of 5.505 billion dollars in August, central bank data showed. Brazil had been expected to post a deficit of 5.1bn.
Brazil's current account deficit in July was 9.018 billion, the central bank said last month. Foreign direct investment was 3.775 billion in August, above market expectations of 3.5 billion. The bank also revised down its estimates for the country's trade surplus in 2013 to 2 billion from 7 billion dollars previously.