Brazil & Southern Cone - August 2007 (ISSN 1471-4431

There is no chance of the central bank hitting its inflation targets for 2007. The central bank's target was for a rate of between 4.5% and 6.5%. The consensus is for a rate of around 7.6%. The lowest forecast for 2007 was for a rate of around 6.9%. Most local economists expect that inflation will come down from July's lofty rate in August and some expect months of negative inflation in the second half of the year, but none expect inflation to come out anywhere close to the government's target. 

Apart from inflation the economy is doing moderately well. In the first seven months exports rose by 10.3%, year-on-year, to US$2.57bn. Although traditional exports (meat, wool and leather) were 4% down on the same period of 2006 at US$750m, non-traditional exports, mostly manufactures, were up by 17% at US$1.82bn.Seragro, a consultancy, expects agricultural exports to rise by 30% this year to be US$550m, 30% higher this year than they were in 2006. Rice and barely exports are likely to be particularly strong as are soya, wheat and maize exports. The wheat crop is likely to be around 600,000t of which a third will be exported.

Already the winter season exports have brought in US$140m compared with the US$85m they earnt in the same period of 2006. 

Seragro expects the total harvest to weigh in at 3.5m t, up 20% on the 2006 harvest. 

Inflation: In July the rate was 0.83%, well up on June's 0.13%. This brought the accumulated rate for the first seven months to 8.03%.