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2.3%: In 2005 Brazil Grew at Half the Rate of 2004

Gross domestic product in Latin America’s largest economy grew by 2.3 percent in 2005 amid high interest rates used to keep inflation at bay, the Brazilian government announced.

The growth rate was less than half of the 4.9 percent posted in 2004, according to Brazil’s IBGE Census Bureau. GDP measures the value of all goods and services produced in a country.

"To grow faster, interest rates need to go down more," said Jason Vieira, chief economist at the GRC Visão consultancy in São Paulo.

The central bank had elevated its benchmark Selic interest rate by 3.75 percentage points in the 12 months through August 2005, reaching a high of 19.75 percent annually to keep inflation in check. The Selic rate started declining in September and now stands at 17.25 percent.

Last year’s GDP growth was led by mineral extraction, which grew 10.9 percent. Industry increased 2.5 percent and services expanded 2 percent from 2004.

Agriculture rose just 0.8 percent, the poorest performance since 1997, when it fell by 0.8 percent, IBGE said. A drought in the south hurt grains and an outbreak of foot-and-mouth disease led to a drop in meat exports.

The mediocre growth rate may be bad news for Brazilian President Luiz Inácio Lula da Silva, who likely will run for a second four-year term in October.

The run-up to the October election may itself boost growth, GRC Visão’s Vieira said, as the government likely will increase spending. Also, temporary jobs will be created for political campaigns, leaving Brazilians with more money to spend.

Economists expect growth to pick up this year, leading to a full-year GDP expansion of between 3.5 percent and four percent.

Late last year, Finance Minister Antonio Palocci predicted Brazil’s economy would grow by close to five percent in 2006.

Mercopress – www.mercopress.com

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  • Guest

    There was no reduction ….
    ..in meat exports !

    But it is quite correct to say that there should be some type of growth this year….
    DUE TO THE ELECTION !

    IT IS QUITE SHAMEFUL THAT YOU GOVERNMENT MANIPULATE ECONOMIC GROWTH AND SPENDINGS AS IT PLEASES THEM TO TRY TO WIN THE NEXT ELECTIONS AT THE EXPENSE OF THE BRAZILIAN SOCIETY !!

    THIS IS FAKED, MANIPULATED, TRUNKED ELECTIONS….THAT START 9 MONTHS IN ADVANCE.

    WHAT THEY DO IS NO DIFFERENCE TO…..
    V O T E B U Y I N G OF THE ELECTORATE !!!!!!!!!!!

    QUITE A SHAME !

  • Guest

    TRUE STATISTICS ARE EVEN WORSE !
    BRAZIL HAS THE WORST GROWTH RATE, FOR 1 AND 3 YEARS PERIODS, OF ALL THE DEVELOPING COUNTRIES !

    JUST THE LAST OF YOUR CLASSROOM !

    BUT LISTEN TO LULA AND HIS JUNKIES AT THE GOVERNMENT . THEY ARE VERY PROUD OF THEIR ECONOMIC ACHIEVEMENTS !!!!!

    If they are proud of their failures and mismanagement and that the brazilian society are just as proud of being at the queue of the queue, that is exactly what Lula expects from you……in October !

    QUITE SIMPLE !

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