Economist Betting Lower Interests Will Take Brazil from Slump

Despite the prospect of a smaller growth in this year’s Gross Domestic Product (GDP), the economist Fábio Giambiagi, coordinator of the Conjunctural Accompaniment Group in the Institute of Applied Economic Research (IPEA), believes that, since November, the Brazilian economy has shown signs of recovery, owing basically to two factors.

Giambiagi was one of the people in charge of an IPEA study released yesterday, indicating a decline in the GDP projections for 2005 and 2006.

According to the study, this year’s GDP growth should amount to 2.3%, instead of 3.5%, as was previously estimated. Next year’s forecast was lowered from 4% to 3.4%.

In the economist’s view, the first factor pointing to an improvement in the economy is the inventory level reduction, which was "very strong" in the third quarter of this year.

"Sales levels didn’t drop, but there was merchandise available. Industry didn’t have to produce much," he informed.

"But since stores can’t sell what they don’t have, once inventory adjustments are made, the tendency is for their demand to increase to maintain a regular supply and their sales to maintain a good pace," he said.

The second factor, according to Giambiagi, is the weakening of the effects of the political crisis, which had a negative effect on the performance of the economy in recent months.

He also comments that the onset of the process of lowering the benchmark interest rate (Selic) can contribute to a recovery in the level of economic activity.

The Central Bank’s Monetary Policy Committee has been reducing the Selic since May. At its most recent meeting, on November 23, the annualized Selic was reduced from 19% to 18.5%.

Agência Brasil

Tags:

  • Show Comments (0)

Your email address will not be published.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

US Helps Brazilian Police Arrest 43 from Visa Gang That Sent People to the US

Brazil’s Federal Police (PF) operating in the southeasterb Brazilian states of São Paulo and ...

Musical Brazil: Relatively Speaking, It’s All in the Family

As regular readers of the Brazzil website know, I have a profound interest in, ...

RAPIDINHAS

Brazilians have been chosen once again as the world champions of sex. The latest ...

No Need to Despair. We Still Have Flamengo Football Club to Save Brazil.

The question that won’t go away: what national structure in Brazil will replace the ...

Light Trading in Brazil While Varig Learns Bankruptcy Is the Best Medicine

Brazil’s stock market inched ahead, while Mexico receded. Investors are awaiting meaningful data from ...

Brazil: How to Kill a Landless

There have been frequent episodes when Brazilian estate owners used terrorist methods against the ...

Lawyers for Sister Dorothy’s Murder Trying Again to Get Him Out of Jail

Vitalmiro Bastos de Moura, aka Bida, the landowning farmer accused of being one of ...

Brazil Warns Guinea-Bissau Against Use of Force

The Council of Ministers of the Community of Portuguese-Speaking Countries (CPLP) resolved to dispatch ...

Brazil Says Present at Saudi International Healthcare Fair

The Arab Brazilian Chamber of Commerce (CCAB) is going to participate in the Saudi ...

From 321 Routes of Sex Slavery in Brazil 190 Are Domestic

Human trafficking for sexual ends is something most people know little about. Even professionals ...