Boston, MA -- (SBWIRE) -- 03/10/2014 -- BMI's outlook for the Brazilian shipping industry remains strong with very healthy rates of growth expected in 2014 at the country's two largest ports, Santos and Salvador (double-digit at both). However, while stronger-than-expected GDP data in the year-to-date has seen us upgrade our 2013 real GDP growth forecast moderately, we believe the economic recovery is unlikely to accelerate further in 2014.

Indeed, a weaker exchange rate and higher interest rates are likely to temper private consumption, while fixed investment will continue to post only a modest recovery, and fiscal pressures will keep government consumption relatively moderate. As such, we forecast real GDP growth of 2.4% in 2014, only modestly stronger than 2.3% in 2013.

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Lower metals prices and weaker demand on the back of slowing growth in China will continue to impact Brazil's balance of payments outlook in the next few years, underpinning our view for a multi-year period of currency weakness. Indeed, due in large part to these dynamics, we estimate that Brazil posted its first trade deficit in over a decade in 2013, and expect the trade account to remain in the red in the next several years as export growth remains relatively moderate and imports pick up (see 'Current Account Deterioration To Continue', January 13). This in turn will see the current account shortfall widen to 4.2% of GDP in 2014, from an estimated 3.7% in 2013, and significantly wider than 2.4% of GDP in 2012.

Key Industry Forecasts

- Total tonnage throughput at the Port of Santos to grow 10.0% in 2014 to reach 125.49mn tonnes.
- Container throughput at Santos to grow 9.5% to reach 3.78mn twenty-foot equivalent units (TEUs) in 2014.

Key Industry Trends

Brazil and Cape Verde Collaboration Could Raise US$50mn In First Year: As much as US$50mn could be raised by a new shipping line linking Brazil and Cabo Verde (Cape Verde) in its first year, according to an individual close to proceedings. The link up forms part of Brazil's 'Projecto Africa' and was hailed by the Ceara Chamber of Foreign Trade, Roberto Marinho.

Shares Of OSX Brasil's Leasing Unit Frozen: Shares of shipbuilding company OSX Brasil's leasing unit were embargoed following a judge's decision in the Netherlands to grant a request from Spanish engineering and construction company Acciona, it was announced in January 2014. Acciona petitioned the court to hold OSX Leasing's shares in order to secure payment from the shipbuilder. OSX owns the OSX-3 offshore oil-processing vessel developed by Japan-based MODEC.

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