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Development Bank Chief Predicts Full Steam and 5% Growth for Brazilian Economy

Progress in the Brazilian industrial sector in the first half of this year was stimulated by a greater supply of credit from Brazil’s National Economic and Social Development Bank (BNDES).

This proposition was offered by the president of the BNDES, Guido Mantega, who recalled that the bank’s loans to the industrial sector rose 38% during the period between January and July of this year, compared with the same period last year.

On Wednesday, August 31, the Brazilian Institute of Geography and Statistics (IBGE) reported growth of 1.4% in the Gross Domestic Product (GDP) in the second quarter of this year, when compared with the first quarter.

The leading performer was industry, which grew 3% between April and June, compared with the period between January and March.

Mantega made this observation after the opening of the National Forum of the National Confederation of Industry (CNI). The theme of the Forum is the Reform of Brazilian State Institutions.

Mantega believes that entrepreneurs have more confidence in the country and in the stability of its institutions and the economy. "I do not agree that entrepreneurs are more wary," he affirmed.

Mantega recalled that, just as credit increased in the economy, the same thing occurred with the BNDES. He said that the bank is disbursing more funds, which are being used to acquire capital goods, machinery, and equipment.

"Brazilian entrepreneurs are currently buying more machinery and equipment than in the past. They are modernizing their productive capacity. They are replacing old machines with new ones that produce two or three times as much and lower production costs," he observed.

In his view, entrepreneurs regard the current political crisis as something "temporary that will be surpassed."

Mantega added that, in light of factors such as the growth in the GDP, increased investment, and falling inflation, together with the prospect of lower interest rates and an improvement in the exchange rate, the second half of the year will experience more favorable conditions.

"The second semester will be better than the first, and we shall enter 2006 with the economy operating at full steam, growing around 5%," he said. According to him, the GDP is expected to grow between 3.5% and 4% this year.

Agência Brasil

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