MercoPress. South Atlantic News Agency

Brazilian industry forecasted to expand 7,5%.

The president of one of Brazil's most important industry organization forecasted industry would grow 7,5% this year given the overall strong recovery of the economy and the rather low comparison base.

"They are strong numbers, but we must remember on a rather weak basis, after several years of minimum o null growth", said Armando Monteiro president of the Brazilian Industry Confederation during a seminar in the southern city of Curitiba.

The 7,5% would mark a significant rebound from the weak 0,1% of 2003. Brazilian industry during the first nine months of 2004 expanded 6,5%, according to the Brazilian Statistics and Geography Institute.

However Mr. Monteiro also admitted that the economy's recovery has been steady in spite of the tough monetary policy of the Brazilian Central Bank which raised the basic reference rate Selic in the last three months.

"Industry's confidence is becoming robust. The entrepreneur wants to keep his share of the market and believes in his business. In spite of the different oscillations, mainly interest rates, there's still confidence prospects", insisted Mr. Monteiro who forecasted the Brazilian economy would grow 5% this year.

In the last three months the Central Bank raised the Selic rate three times, from 16% to 17,5% in an effort to contain inflationary signals precisely when the economy has began to pick up vigorously.

Meantime the Brazilian International Trade Office reported that November's trade surplus was 2, 08 billion US dollars, the lowest since last April, given the important jump in imports which during November was the highest in all of 2004.

November exports totalled 8,1 billion US dollars and imports, 6,08 billion US dollars, which are far above the figures of the same month in 2003, however the surplus was below that achieved twelve months ago, 3 billion US dollars.

The steady recovery of the domestic market means Brazilian imports are now averaging 300 million US dollars per day.

At the current rate of exports and surplus, reaching 30,2 billion US dollars in the first eleven months of 2004, experts believe the twelve month target of 32 billion US dollars can be achieved. Total 2003 surplus was 22 billion US dollars.

In the last twelve months, Brazil's overall foreign trade (imports plus exports) reached 155 billion US dollars equivalent to 28% of GDP.

But in spite of the encouraging performance there are some dissents inside the President Lula da Silva administration. Development, Trade, Industry and Foreign Trade minister Fernando Furlan would like to see a "slight depreciation" of the local currency since its current strength favours imports. The Finance Ministry and Central Bank on the other hand argue that the strong Real reflects the international performance of the US dollar and the goods prospects for the Brazilian economy.