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Brazil’s Small Businesses Grow Modest 1.9% in 2005

The year of 2005 was, on average, positive for micro and small companies in the state of São Paulo. The 1.3 million small businesses in the state ended the year with revenues of 241.1 billion reais (US$ 108.5 billion), an increase of 4.5 billion reais (US$ 2 billion) when compared to 2004.

These are the main conclusions of the São Paulo state Brazilian Micro and Small Business Support Service (Sebrae) Indices, a monthly study that is carried out by the institution considering 2,700 micro and small companies in the transformation, trade and service sectors in the state. The study takes into consideration revenues, employees and salary expenses.

In the year of 2005, monthly revenues of the micro and small companies presented an increase of 1.9% over the previous year. Trade and Services pulled the results up having grown 3.2% and 3.5%, respectively.

According to the coordinator of the study, Marco Aurélio Bedê, as over 70% of the micro and small companies in the state are in trade and service, sectors, which are more dependent on the domestic market, greater employment and income in the economy expands family purchases, helping this group of companies.

Another factor that contributed to the good performance of micro and small companies was the greater offer of consumer credit. Central Bank figures show that total credit operations in the financial system presented growth of 21.5% in 2005, fueled by personal credit.

The industrial sector, in turn, does not have much to commemorate. The weak performance during the year was reflected in the 2005 balance sheets: a reduction of 3.1%, when compared to the previous year. To the Sebrae economist in São Paulo, one of the determining factors for this result was high interest rates in the period.

In 2005, once again, micro and small companies presented themselves as great employers in the state. According to the study, the number of employees in the sector rose 4.1% when compared to December 2004. A total of 231,000 new positions were opened.

Figures in the study show that micro and small companies not only generate most of the positions in the private sector of the economy (with 67% of these posts), but also present a large potential for expansion of new positions when there are signs of recovery on the domestic market.

Sebrae

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