Brazilian economy growing at eight percent

RIO DE JANEIRO - Brazil’s economy grew at an annualised rate of eight percent in the third quarter and the result for the final three months of the year will be roughly equivalent, Finance Minister Guido Mantega has said.

After growing 1.9 percent in the second quarter, real gross domestic product growth in the third quarter relative to the previous three months came in at two percent, or eight percent in annualised terms, he said Wednesday at a meeting of the Council for Economic and Social Development.

The minister added that that result has led the government to forecast positive growth for all of 2009. Growth of as much as five percent is expected next year and similar levels should be maintained through at least 2014.

Brazil’s economy experienced average annual growth of 4.2 percent during the 2003-08 period.

In citing similar figures last month, President Luiz Inacio Lula da Silva said Latin America’s largest economy had not only overcome the global economic crisis but achieved a “Chinese pace” of economic expansion in the third quarter, with annualised growth of close to nine percent.

Mantega said the strong performance of the domestic market allowed the Brazilian economy to bounce back quickly after feeling the effects of the global crisis in late 2008.

He added that capital goods spending and even manufacturing - the sector most affected by the crisis due to a sharp drop in Brazilian exports - are already in full recovery mode.

According to the finance minister, investment in machinery and equipment rose 5.9 percent month-on-month in October after climbing five percent in September.

“The good news is the recovery in the gross formation of fixed capital. Investment is no longer lacking to guarantee a cycle of future growth,” he said after predicting that investment in 2010 will be 15 percent higher than this year.

Mantega said five percent growth in investment is assured just with the public works needed in preparation for the 2014 soccer World Cup and the 2016 Summer Games in Rio de Janeiro.

The finance minister also noted state-controlled oil company Petrobras’ plans to exploit massive offshore hydrocarbon reserves in the coming years.

In addition, Mantega announced a new package of economic-stimulus measures.

The core of the package is 1.5 billion reais ($870 million) in tax exemptions and reductions similar to those instituted this year to bolster the automotive sector, which ended 2009 with record output and sales.

The government also has decided to completely eliminate different taxes on refineries, petrochemical facilities, fertilizer plants and wind-energy companies and extended until June 30, 2010, tax cuts on manufactured goods.

Some tax exemptions granted to computer manufacturers also have been extended until 2014.

–EFE