• Categories
  • Archives

Brazil Expecting Economy to Shrink 0.30%, Worst in 17 Years

Brazilian industry Economists from Brazil are forecasting that Latin America's biggest economy will fall into the worst recession since 1992 as companies scale back output amid the first global recession since World War II.

Analysts covering Brazil expect 2009 GDP to shrink 0.30%, down from a previous forecast of a 0.19% drop, according to the median estimate in an April 9 Central Bank survey of about 100 economists released Monday.

Industrial production had its two biggest monthly declines since 1992 in January and February as the global recession choked demand. Brazilian President Luiz Inácio Lula da Silva's government has responded by cutting taxes on car sales and construction materials while offering subsidies to homebuilders and promising to build a million houses.

"We are acting to ensure that the strength of our domestic market will compensate for deficiencies in external markets," Lula said Monday in his weekly radio program Breakfast with the President, broadcast nationwide. "Step by step, we're managing to take care of the economic situation."

Policy makers also forecast that the Central Bank will cut the SELIC benchmark interest rate for a third straight time to a record low 10.25% on April 29, according to the median forecast in the central bank survey.

In spite of the negative prospects it was also confirmed that Brazil could contribute with US$ 4.5 billion to the International Monetary Fund. Finance minister Guido Mantega had anticipated the announcement last week. He said the resources would go toward helping make credit available to other emerging market countries.

The move shows the country's finances are strong, Mantega said at a news conference. "Now we are just entering the club of IMF creditors," he said.

Brazil will make up to US$ 4.5 billion available to the IMF, on top of the US$ 10 billion it already pledged at a G20 meeting, Mantega said, adding that "it will be very unlikely" the IMF will draw on all the funds.

Brazil's inclusion into the IMF financial transaction plan is likely to be made official by the end of the month. The move is not expected to affect Brazil's international reserves but only its make-up, since the country would use part of its reserves to acquire the IMF Special Drawing Rights. Brazil's international reserves stood at US$ 201 billion last week.

Between 1998 and 2003 Brazil borrowed more than US$ 40 billion from the IMF but paid all its outstanding loans to the multilateral organization in 2005.

Mercopress

Tags:

  • Show Comments (1)

  • Lloyd C ata

    0.30%, A relatively good number
    When I first entered this forum many said that Brazils economy was so tied to the US that if the US economy
    catch a cold then Brazil would catch pneumonia. Now the US economy has crashed and Brazil has a 0.3 percent
    decline…how is this possible?
    Brazil giving money to the IMF…speaks loudly to the relative strength of the Brazilian economy during a global
    economic crisis. It’s fine to say “I told you so” this many years later, so I just let the truth reside in the archives
    of this forum.

    Try to remember my warnings about the US “exporting inflation”. This is the real danger to Brazil and the other
    developing nations. Dollar-denomination investments are the trap that will fuel inflation throughout Latin America.
    We all know that inflation is the enemy of economic stability and the stimulant of social unrest. Be very careful!

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Comatose City

In São Paulo, every Secretary is dealing with a lack of resources. According to ...

Hugo Chavez Finds Out He Has Few Friends in Brazil’s Senate

Brazilian senators postponed on Wednesday until next Tuesday the vote on Venezuela's incorporation to ...

RAPIDINHAS

Brazil and all other nations that speak Portuguese are once again bracing for an ...

We Owe No Money, But We Are Brothers, Says Brazil to Paraguay Demands

The Brazilian government could anticipate payments to Paraguay for the energy from the shared ...

US Makes Up for Time Lost in Relationship with Brazil and Neighbors

Several outstanding United States officials will be visiting Brazil and other "friendly" countries in ...

Brazil’s Land Reform Is Spurring Amazon Deforestation, Greenpeace Claims

Brazil's government has promised to investigate allegations that its policy of settling landless communities ...

Brazil Joins Left Coalition to Create Mercosur Parliament

The creation of a Forum of Progressive Parties of the Southern Cone was the ...

Brazil Is Not Afraid of Inflation and Plans to Further Cut Interest Rates

The Brazilian government set its inflation target for 2011 at 4.5%, seeing no evidence ...

The Perils of Buying Under-Construction Property in Brazil

With the increasing amount of Brazilian and international property buyers acquiring pre-construction real estate ...

Bank of America Dumps Chile and Uruguay Operations on Brazil’s Itaíº

Bank of America, the US’s number one consumer bank, is closing shop in Latin ...