In a Recession, Brazil Gets Stimulus Package Just in Time for the Elections

Port of Santos, in BrazilFinance Minister Guido Mantega presented on Monday a package of tax measures aimed at stimulating Brazil’s economy less than a month ahead of the presidential election. 

“We want to make Brazilian industry more competitive and reduce juridical insecurity,” he said after meeting in São Paulo with representatives of the powerful CNI business confederation.

The changes include extending to all industries a reduction in the rate of tax on overseas profits from 34% to 26%. Until now, that benefit has been available only to firms in construction, services, food processing and the beverage sector.

Mantega also announced that a program providing subsidies to exporters of manufactured goods is to be made permanent, with the levels of support adjusted on an annual basis.

The tax breaks are part of a stimulus program adopted by president Dilma Rousseff as she seeks a second four-year term in the October 5 balloting.

Brazil, Latin America’s largest economy, is currently in a technical recession after two consecutive quarters of negative growth.

A report released Monday by the Organization for Economic Cooperation and Development said Brazil’s economy would grow by just 0.30% this year as the world’s largest economies recover at a slower rate than initially expected.

Brazil’s GDP expanded by 7.5% in 2010, but the economy posted tepid growth of 2.7% in 2011 and just 1% in 2012 before rebounding with a gain of 2.3% in 2013.

Positive Forex

US dollar inflows to Brazil was higher than outflows by US$ 4.151 billion last week. As a consequence, the foreign exchange flow is back to positive, after posting deficits of US$ 3.056 billion in August and US$ 1.9 billion in the first week of September.

In the first two weeks of September, the foreign exchange flow was positive by US$ 2.251 billion. The figures have been released this Wednesday (17th) by the Brazilian Central Bank.

Month-to-date through September 12th, the bulk of the foreign exchange surplus originated from a US$ 1.406 billion surplus in export and import operations.

Financial operations (investment in bonds, profit and dividend remittances and foreign direct investment, among other operations) posted an US$ 845 million surplus.

Year-to-date through September 12th, the foreign exchange flow ran a US$ 1.551 billion surplus. Over this period, financial operations had a US$ 2.322 billion deficit and trade-related foreign exchange operations had a US$ 3.873 billion surplus.

MP/ABr

Tags:

You May Also Like

Brazil, a Nation at Peace

The days leading into a unilateral Anglo-American invasion of Iraq seem to be numbered. ...

Bush to Brazil’s Lula: ‘Thanks for a Frank and Open Relationship’

Mr. President, thank you very much. Laura and I are really pleased to be ...

From Cabaret to Syllables

The partnership between Caetano and Gil is one of the most fertile and lasting ...

Brazil Plans to Create 9 Federal Universities and 41 Campuses

Brazil expects to have 700,000 more students enrolled in higher education in 2007. This ...

In Brazil, Algeria President Urges Israel to Abide by the Law

The President of Algeria, Abdelaziz Bouteflika, who is representing the Arab League at the ...

Brazil’s Machinery Industry Fell 18% in 2009, But There Are Signs of Recovery

Brazil’s capital goods industry posted revenues of 64 billion Brazilian reais (US$ 34.8 billion) ...

IMF Lavishes Praise on Brazil

The Executive Board of the International Monetary Fund (IMF) has completed the 10th and ...

Brazil Can’t Compete on Cost or Gumption with China

So as to reach Arab consumers, most of the Brazilian companies face a challenge: ...

Brazil Beats US and Now Is Number One in Spam

Cisco's 2009 annual report released this Tuesday, December 8, reveals that Brazil surpassed the ...

Milton Nascimento Back in California for Stanford Jazz Festival

Brazilian music legends Milton Nascimento and Oscar Castro-Neves will be on the campus of ...