Brazilian Industry Blames High Interest Rates for Paltry GDP

The president of Brazil’s Federation of Industries of the State of São Paulo (Fiesp), Paulo Skaf, referred to the 0.3% increase in the Gross Domestic Product (GDP) in the first quarter of this year, as announced by the Brazilian Institute of Geography and Statistics (IBGE), as “piddling.”

“This is the worst result in the last seven quarters and projects an annual expansion of only 1.21%,” he remarked in a note to the press.


“This miserable performance is due to high interest rates, which permitted investments to grow only 2.3%, compared with the first quarter of last year.”


Skaf pointed out that, in comparison with the first quarter of 2004, the Brazilian GDP rose 2.9%, “as against 4.7%, 5.9%, and 5.1% in previous comparisons. It is always well to recall that the global economy will expand 4.4% in 2005. In the first quarter, China experienced growth of 9.1%, and the United States, 3.5%,” he observed.


Besides the result for the first quarter of this year, the president of the Fiesp mentioned that the IBGE revised last year’s growth figure down from 5.2% to 4.9%.


According to Skaf, growth in 2004 reflected the performance of sales abroad, which encouraged investment.


“In 2005, however, everything is happening differently. The increase in interest rates toppled the investments that propelled growth in 2004. These investments still registered a growth of 9.3% in the fourth quarter and a paltry 2.3% in the first quarter of 2005.


“In marginal terms, this meant drops of 3.9% and 3.0%, respectively, in the fourth quarter of last year and the first quarter of this year,” he said in the note.


Skaf also recalled that the growth in exports contributed to the GDP this quarter (13.6%) and in the previous one (16.2%).


“But the enhanced appreciation of the exchange rate in the second quarter will surely have an effect on the contribution of foreign sales to the growth of the economy,” he remarked.


Agência Brasil

Tags:

Ads

You May Also Like

Majority of Brazilians Oppose Lula’s Anti-Hunger Programs

For the first time, negative evaluations by the Brazilian population with regard to the ...

Odd Bedfellows

Looking at the range of Lula’s backers one cannot help recalling Robert Browning’s poem ...

While Brazil Pays Lip Service to Idea Uruguay Gives Every Student a Laptop

Brazil has been talking about it for years but never delivered. The little and ...

Brazilian Congress Taking Its Time to Pay Paraguay More for Itaipu

It seems there is a positive attitude in the Brazilian congress towards the consideration ...

Foreigners Cash Out US$ 1.8 Bi, But Brazil Bets They’ll Buy US$ 26 Bi in Stocks

Brazil reached last year a record US$ 34.6 billion (almost double the US$ 18.7 ...

Jordan Buys Seven Brazilian Embraer Jets

Embraer and Royal Jordanian Airlines have signed this Wednesday, March 22, a contract for ...

Brazilian bishop Luiz Flávio Cappio

Lula’s and Pope’s Emissaries Try to End Brazilian Bishop’s Hunger Strike

The head of the Brazilian Secretariat of Institutional Relations, Minister Jaques Wagner, is on ...

Brazil’s Largest Airline Delays Growth Plans Due to Aviation Chaos

Brazil's biggest airline, TAM Linhas Aéreas, said on Tuesday, September 4, it postponed plans ...

Chí¡vez Calls Venezuela-Brazil Gas Pipeline Insurance Against Energy Crisis

The left-leaning leaders of three South American heavyweights – Brazil, Argentina and Venezuela – ...

A Plan to Juice Up Brazil’s Fruit Exports

Brazilian fruit industries want to produce and export more fruit juice. For this reason, ...