Brazilian Economy in Record Growth

By Jewellord Singh, Contributing Reporter

RIO DE JANEIRO – The Institute of Brazilian Geography and Statistics (IBGE) has released the first trimester report of Brazil’s 2010 economic performance, and the results indicate a healthy financial picture for the country with record growth, thousands of jobs created and salary increases above the line of inflation so far this year.

As of April, Brazil’s economy had grown by nine percent, industrial sector jobs increased by 0.4 percent, and tax collection expanded by two percent since the start of the year. This astounding performance of positive growth indicators in four consecutive months is even more remarkable coming in the context of sustained decline in much of the industrial world.

In comparison to the last trimester of 2009, Brazil’s Gross Domestic Product grew by 2.7 percent, while employment in the industrial sector has increased over three percent compared to April 2009. The GDP currently stands at R$826.4 billion.

Finance Minister Guido Mantega said of the news in a press statement, “In comparison with the international market, just China had growth of such magnitude. The result shows the vigor and dynamics of the Brazilian economy.”

Overall, industry grew 14.6 percent, the service sector 5.9 percent and agriculture 5.1 percent. Imports of goods and services rose by a remarkable 39.5 percent.

However, Mantega was keen to stress that the statistics should be viewed with some caution. Comparisons are coming against low performance in 2009 across all sectors as a result of the global economic downturn. In the first trimester of last year, the GDP actually fell by 2.1 percent against 2008, while in total the Brazilian economy shrunk by 0.2 percent.

“We cannot forget the base for comparison. Industry, for example, had negative growth in 2009. In 2010, the Brazilian economy should grow between 6 percent and 6.5 percent,” he said.

Public and private investment have provided the stimuli for much of the growth, with a 7.4 percent increase over the last trimester of 2009.

Compared to the other BRIC (Brazil, Russia, India and China) nations, those emerging economies with sustained growth rates seen as playing a greater role in shifting the terrains in the global economy, Brazil also fared well. China reported impressive growth figures of 11.9 percent, India registered 8.6 percent growth, and Russia 4.5 percent. The incredible performance of the emerging markets runs in contrast with the recent bailing out of Greece and the bleak prospects of British economic recovery even after a financial package to save the crumbling banking system.

With such positive outcomes in the first quarter, Brazil looks likely to maintain its strong performance in 2010. Not even the forthcoming elections should pose a threat to the picture, with Lula’s successor Rousseff leading the race with promises to maintain current economic policy. The business community is positive about the country’s prospects, but poverty and inequality remain challenges for the next government, and central issues in the election race.