During a breakfast press conference on Thursday, December 8, Brazil’s Minister of Development, Industry and Foreign Trade, Luis Fernando Furlan, declared that the drop in GDP growth of 1.2% in the third quarter of this year was not an accident.

According to the Brazilian Minister, the event was "the result of a deliberate effort to clamp down on inflation." Or, in other words, said the Minister, "monetary measures which put a brake on the economy."

Asked what has been worse for the Brazilian economy in 2005, the interest rate or the exchange rate, Furlan responded that on one hand it was certainly the high interest rates which inhibited sales domestically, while exporters suffered with the valorization of the real.

"We are between a rock and a hard place on the domestic market because of financial costs, while in the export sector we have serious difficulties with profitability because our currency has increased sharply in value against the dollar," declared the Minister.

Furlan pointed out that in spite of the problems some sectors, such as vehicles, were doing very well. But others, such as footwear, were facing big problems. Furlan concluded by saying he was optimistic about 2006.

ABr