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By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Although business confidence in the commerce segment in Brazil fell slightly (.09 percent) in July, the Commerce Business Confidence Index (ICEC), continues in positive territory indicating optimism in Brazil’s commerce business segment, according to the National Confederation of Commerce of Goods, Services and Tourism (CNC).

Brazil,Brazil's commerce business index is optimistic that sales will pick up in the second semester of 2017,
Brazil’s commerce business index is optimistic that sales will pick up in the second semester of 2017, photo by Marcos Santos/USP Imagens/Fotos Publicas.

“The intensifying of the political crisis has reduced business confidence in the last two months, as uncertainties over the speed of fiscal adjustment prevail,” says CNC economist Izis Ferreira.

Adding, “Signs of gradual resumption of retail sales in the short term, however, strengthen the scenario of a more favorable performance of commerce in 2017.”

Despite the decrease of the overall index, the expectations index grew by 1.1 percent between June and July, with the better assessments of the future of the economy, which was up by 1.3 percent.

In addition, businessmen are also more confident about the present (up by 0.2 percent), a result of the improved assessment of their companies’ situation (up by 1.7 percent). Assessments of the current situation however worsened in relation to the economy (-1.1 percent).

According to CNC officials the decline of the index between June and July to 101.5 points, on a scale of 0 to 200 points, was due to the negative results of investment intentions, which fell by 1.2 percent during the period. The index shows that businesses expect to hire fewer employees (-2.1 percent) and invest less in the company (-0.8 percent).

The CNC’s latest confidence index results were released days after Brazil’s federal government reiterated their forecast of a growth of 0.5 percent for the country’s GDP this year. Brazil’s financial market forecasts a growth of 0.34 percent this year for the GDP. In 2016, the GDP fell by 3.6 percent.

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