Govt measures ‘have helped keep Brazilian economy robust’
Interest rates could fall again by another percentage point next month, with policy-makers forecasted to lower the benchmark Selic to 11.75 per cent, the news provider reports.
In addition, Brazil’s state-run oil company announced in January that it is to increase its five-year investment plan by 55 per cent.
Petrobras intends to spend $174.4 billion (£122 billion) between 2009 and 2013, investing $28.9 billion in 2009 alone, a significant increase on the $112.4 billion the company planned to spend between 2008 and 2012.
It later emerged that this expenditure will be partly funded by a $10 billion loan from the China, made- in return for 100 million barrels of oil per day.
Earlier this month, President Luiz Inacio Lula da Silva pledged to build one million new homes by 2010 in another effort to boost the Brazilian economy.
He said that the construction industry is extremely important for the country and can provide “dynamism” to the financial system, as well as helping to generate jobs.
The government believes that investment in this area and in infrastructure will help to stimulate growth.
Paulo Wrobel, from the commercial section of the Brazilian embassy in London, says commentators’ assertions that the country’s economy is stable are true.
He states that South American nation is likely to manage better during the recession than developed countries such as the US, European states and Japan because the markets are “very robust”.
“There [have been] no consequences so far in the financial system in Brazil from the international financial crisis. The regulations in place in Brazil are very strict [and have been] for the last decade or so,” Mr Wrobel asserts, saying the country has not seen the kind of turmoil experienced by other major powers.
He continues: “The other reason is that there was no housing boom in Brazil in the last ten years – construction is growing quite substantially but there was no madness in terms of lending for those without the capacity to pay.”
Despite this, the country has not managed to completely avoid being affected by the global economic crisis and exports have contracted as the market has shrunk.
However, the diversity of Brazil’s trade partners means the country is well-placed and there has been some a certain amount of recovery recently, Mr Wrobel states.
