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Brazzil - Economy - June 2004

Brazil, the South American Tiger

In New York, accompanying Brazilian President Lula in a trade
mission, Brazil's Minister of Finance, Antônio Palocci, said
that Brazil is experiencing a new stage of sustainable growth.
He told 676 American, Canadian, and Mexican businessmen
that Brazil is much less vulnerable to outside shocks today.

Ana Paula Marra


Picture In New York, at the "Brazil & Partners: Investment Opportunities" conference organized by the Brazilian government, Brazil's Minister of Planning, Guido Mantega, underscored the need for foreign businessmen to invest in Brazil to give greater sustainability to the Brazilian economy.

"Due to budgetary restrictions, Brazil does not have funds to make all the necessary investments. Therefore, the private sector must become the chief collaborator of the Brazilian government," Mantega observed.

The Minister pointed out that the Brazilian economy offers many possibilities and, if more and more investors are attracted, it will be capable of impressive results, similar to those achieved by Asian economies in recent years.

In the Minister's view, the Public-Private Partnership (PPP) is the keystone to reducing the vulnerability of the Brazilian economy. This type of partnership will be applicable in various areas, from basic sanitation and construction to electric power.

The Minister of Finance, Antônio Palocci, said, in turn, that Brazil is experiencing a new stage of sustainable growth. He presented a positive picture of Brazil to the 676 American, Canadian, and Mexican businessmen attending the meeting in New York.

During his speech to the investors, Minister Palocci provided figures on the Brazilian economy showing that exports continue to grow, which is a source of tranquility for the country's economic policy. "Brazil is much less vulnerable to outside shocks," he emphasized.

Palocci stated that many investors want to know whether the Brazilian government will continue in its reform efforts. The Minister explained that President Lula's leadership represents the greatest assurance that the path of fair and consistent policies is a solid and permanent one.

The Minister of Development, Industry, and Foreign Trade, Luiz Fernando Furlan, said, for his part, that it is worthwhile for foreign entrepreneurs to invest in the industrial sector in Brazil. "Brazil is playing a big role in the production of the most recent generation of buses and trucks. Annual growth in this area exceeds 50 percent," Furlan announced.

According to the Minister, cell phones are another area in Brazil that can generate profits for investors. Investments in this sector will triple in the coming years, Furlan said. Brazil is currently considered the world's largest producer of electronic games for cell phones.

The footware sector is also quite promising, Furlan pointed out. This year the sector will grow 15 percent. The Minister affirmed that Brazilian exports are growing over 25 percent annually, and imports, around 20 percent. "Many investment opportunities exist in Brazil, as well as a reliable government and competent teams. Our goal is to strive for economic growth that is competitive, sustainable, and efficient," the Minister underscored.

A Lula Appeal

At the opening of the conference President Luiz Inácio Lula da Silva asked foreign investors to trust more and invest more in the country. Brazil, he explained, wants to maintain a frank relationship with investors and give constant proof that it is a good place in which to invest.

"The rules in Brazil are clear. There are no surprises there. We just want the game to be open, frank, and productive for Brazil to make extraordinary progress," he pointed out.

Lula argued that the move to welcome new foreign investors is aimed at ensuring effective development 30 years from now. "In no way do we want to pursue electoral politics. We want to grow less, but in a sustainable manner," he added.

In his speech the President promised that those who are interested will encounter facilities when they invest in Brazil. Accompanied by some of his Ministers, Lula had breakfast with 26 American entrepreneurs interested in expanding their investments in Brazil.

Falling Investments

It was revealed, however, that net foreign investments in Brazil amounted to US$ 207 million in May. This figure contributes to the generally downward trend so far this year, following results of US$ 993 million in January, US$ 1.024 billion in February, US$ 703 million in March, and US$ 381 million in April.

Nevertheless, the current transactions account in last month's balance of payments showed a US$ 1.5 billion surplus, establishing a new monthly record and raising the cumulative surplus over the past 12 months to US$ 6.4 billion, the highest ever recorded, according to the Central Bank report issued today. The financial account registered a US$ 2.2 billion deficit, and the overall balance of payments was also negative, US$ 276 million in the red.

Ana Paula Marra works for Agência Brasil (AB), the official press agency of the Brazilian government. Comments are welcome at lia@radiobras.gov.br.
Translated from the Portuguese by David Silberstein.

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