• Categories
  • Archives

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Your email address will not be published.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

40 Years Off Key

That’s Bossa Nova It’s Quite Natural How did bossa nova start? It would be ...

An "F" in Brazilian History

How quickly do we forget. One of Brazil’s largest newspapers opened its columns to ...

New Tribe of Uncontacted Indians Found in Brazilian Amazon

Once again another of Brazil’s uncontacted Indian tribes has been spotted in the country. ...

International Energy Agency Sees Brazil Pre-Salt Oil Findingd as Promising

The International Energy Agency in its just-released monthly report describes the Brazilian pre-salt petroleum ...

Brazil and Africa Talk Globalization and More Trade

The 8th Ambassador Meeting brings together starting today, August 22, in Porto Alegre, capital ...

Brazil’s Defense Minister Confirms Purchase of 12 Mirage Warplanes

Brazil’s Vice-president and Minister of Defense, José Alencar, confirmed, Tuesday, August 30, that Brazil ...

Profits at Brazil’s Petrobras Reach Record US$ 6.9 Billion

During the first nine months of this year, Petrobras – Brazilian Petroleum, S.A. – ...

Three Months of Brazilian Movies in Europe

Considered the greatest itinerating Brazilian movie exhibit in Europe, the Plural Brazil Festival reaches ...

Brazil Gets Same Military Planes Being Used in Iraq

The Brazilian Air Force (FAB) has just  received the first of 12 multi-role military ...

Brazilian Road Equipment Maker Growing Exports 33% a Year

Brazilian road equipment maker Randon exported US$ 138.4 million in the first half of ...