Brazilian private banks' economic forecasts are unexpectedly more optimistic than those made by the government.
Three top banks -- Bradesco, Itau-Unibanco and Rio Bravo Inversions respectively forecast that the GDP would grow 2.1 percent, 1.8 percent and 1.7 to 2 percent in the second quarter.
However, Finance Minister Guido Mantega estimated that the GDP would grow 1.5 to 1.7 percent in the second quarter from a year earlier, while the National Economic and Social Development Bank (BNDES) believes the full-year growth would be just 0.7 percent.
Employment has increased every month since February, giving optimists encouragement.
New industrial employment shows the sector is recovering from the international economic crisis, said Braulio Borges, economist and the head of LCA, one of the largest economic consulting firms in Brazil.
"For example, ... steel production rose 20 percent in July," he said.
Borges forecast a 2 percent drop in the Brazilian economy during the first half of this year, followed by a 2.5 percent rebound in the second half. He estimated a 1.9 percent increase in the second quarter.
Flavio Castelo Branco, of the National Industrial Federation, is less optimistic, saying the second quarter would show negative figures as July's GDP fell 4.8 percent from last October, which was before Brazil plunged into economic recession.
All Brazilian banks agree that investment would rise more slowly than GDP, which might harm the whole-year growth, even though BNDES was offering low-interest loans to investors.
Borges forecast a 9 percent decline in investment in the second quarter, and a 0.3 percent drop in the whole year. Even so, he believes there would be a 13.4 percent rebound in 2010.
Whole-year GDP forecasts by Bradesco, Itau and Rio Bravo are 0.5 percent drop, 0.7 percent drop and flat compared with a year earlier, respectively. Here, official forecasts are more optimistic with BNDES forecasting 0.7 percent growth and the Finance Ministry 1 percent growth.
Forecasts for 2010's GDP growth are similar in both public and private sectors, with Itau, the most pessimistic, forecasting 4.3 percent and the Finance Ministry, the most optimistic, forecasting 5.5 percent.
Source:Xinhua
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