For Entrepreneurs Brazil’s Economy Will Chug Along Whoever Wins the Elections

A survey released Wednesday, January 25, by the American Chamber of Commerce of Rio de Janeiro, Brazil, reveals that Brazilian entrepreneurs intend to maintain their investments at the same level as in 2005, since economic prospects, both domestic and foreign, are positive.

Polling over 500 of its members, including both individuals and corporate entities, between December 16, 2005, and January 5, 2006, the Chamber found that 39% of its entrepreneur-members intend to invest more or less the same this year as they did in 2005.

Among the respondents, 31% plan to invest 25% more, and 26% expect to invest more than 25% more than they did last year.

Last year’s direct investments in Brazil amounted to US$ 105 billion, compared with US$ 102.4 billion in 2004, according to the figures provided by the Chamber.

According to Renato Santos, a Chamber adviser, the entrepreneurs believe in a gradual lowering of the annual benchmark interest rate (Selic) this year. The Selic currently stands at 17.25%.

Santos said that, in the entrepreneurs’ view, this year’s presidential elections will not have much impact on the economy. "Meaning that the economy has already detached itself from politics, to the point where elections do not interfere so much in the workings of the economy," he explained.

According to Santos, another item revealed by the survey and considered fundamental to the evaluations made by the entrepreneurs is that "there is no risk of any more serious problem appearing on the international stage, such as the collapse of a big company or a financial scandal affecting the Stock Exchange."

According to the survey, 96% of the respondents said they will continue to invest in their own line of business this year, 61% believe that the presidential elections will have little effect on the economy, and 43.5% bet that the Selic rate will be reduced around half a percentage point a month through June, when it is expected to stabilize. The majority (78.3%) believes that the international context will be favorable to the Brazilian economy in 2006.

The poll also shows that 48% of the entrepreneur-members believe that the Gross Domestic Product (GDP), the total of all the country’s wealth, will grow between 1% and 3% this year, as against 39% who think that the increase will come to as much as 5%.

Agência Brasil

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