By Mary Carroll, Contributing Reporter
RIO DE JANEIRO, BRAZIL – In August, the Central Bank’s Economic Activity Index (IBC-Br) registered the fifth consecutive rise in GDP, a 0.98 percent increase in comparison with the month of July. It is the highest increase recorded of the last seventeen months.
Chief economist at Votorantim Corretora, Roberto Padovani told O Globo that the IBC-Br for August reflects the measures adopted by government in recent months.
Apart from the successive reductions in interest rates and the “loosening of the compulsory [reserve requirements by banks]”, Padovani says that the stimulation of the automotive sector is behind the improvement in the industry’s figures.
“If we look at the data from July and August, we can imagine that the result of GDP in the third quarter of the year will be around one percent. It’s a good result. It shows, in good measure, the results of government policies” says Padovani.
The information came only a day after the Monetary Policy Committee (Copom) reduced the basic interest rate, for the tenth time, with the aim of stimulating Gross Domestic Product in the midst of international economic uncertainties.
The month-over-month increase indicates that the economy may be finally moving into a recovery process, since last year, when the index showed an accumulated economic growth of 1.06 percent.
For economists who contributed to the Central Bank Focus survey, the country should end the year with a growth of 1.57 percent. In September Finance Minister Guido Mantega revised Brazil’s economic growth forecast for this year to two percent.
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