The Brazilian economy will consolidate the growth trajectory begun in 2017. The industry will grow by 3 per cent and will increase the number of vacancies for workers. Get to know the CNI forecasts for the performance of seven economic indicators this year.

The CNI emphasizes that, in the medium and long term, the economy will be influenced by the elections of 2018.

This year, the Brazilian economy will consolidate the growth trajectory begun in 2017. The industry will grow 3 per cent and companies will increase the supply of jobs for workers. The forecasts are in the special edition of the Joint Report of the National Confederation of Industry (CNI) . Inflation will remain low, paving the way for further reduction in interest rates.

The CNI emphasizes, however, that in the medium and long term, the economy will be influenced by the 2018 elections. “The consolidation of the victory of a candidate committed to the continuity and deepening of the reforms should intensify the process recovery and pave new growth cycle based on the expansion of investment,” said the industry. Get to know the CNI forecasts for the performance of seven economic indicators this year:

1. Economy will grow 2.6 per cent

The pace of activity recovery will increase and consolidate the growth trajectory initiated in 2017. The CNI warns, however, that the sustained growth of the economy depends on the structural reforms, especially the Social Security and tax, which guarantees the balance of the public accounts and help improve business productivity.

2. Industry will expand by 3 per cent

For the first time since 2011, Brazilian industry will grow more than the Gross Domestic Product (GDP). The recovery of the sector will be driven by increased consumption. The extractive industry will grow 2.5%, the processing industry 3.5% and construction 2%.

3. Investments will increase by 4 per cent

After four years of decline, investments will grow again in 2018, stimulated by increased business and consumer confidence, increased demand and improved financial conditions for companies. With the 4% expansion planned for this year, the average investment rate will be equivalent to 15.8% of the Gross Domestic Product (GDP).

4. Consumption will expand by 2.8 per cent

Controlling inflation, falling unemployment, lowering interest rates, and recomposing household finances encouraged buying back. This scenario is expected to continue this year and, coupled with the rebuilding of consumer confidence, will boost demand.

5. Unemployment rate will fall to 11.8 per cent

The reactivation of activity has moved the labor market, which closed 3.5 million jobs between 2015 and 2016. With the acceleration of growth expected this year, companies should contract more than in 2017. The average unemployment rate in 2018 will be 1 percentage point lower than last year.

6. Inflation will remain at 4.4 per cent

Inflation will fall below the 4.5% target set by the Central Bank. Price control is due to the high idleness of the Brazilian economy, the high unemployment rate and the reduction of inflationary inertia in 2017. This year, the CNI estimates that food prices and electricity tariffs will recompose.

7. Average interest rate will be 6.75 per cent per annum

The fall in inflation paves the way for the reduction of basic interest rates for the economy, which currently stand at 7% per year. The Central Bank is expected to announce a new cut in the Selic rate at the first meeting of the Monetary Policy Committee (Copom), scheduled for February 6 and 7.

Source: CNI News Agency

Image: 123RF