São Paulo – Economic activity in Brazil grew by 7.3% in the first two months of the year, compared with the same period of 2009. In February alone, the growth rate was 7.4%, the highest since July 2008, according to consultancy firm Serasa Experian’s Trade Activity Indicator, which records the Gross Domestic Product (GDP) on a monthly basis. As a consequence of the increase, the result for the last 12-month period ended February is 1.4%, as against 0.6% in January.
According to the survey by Serasa Experian, the highlights of Brazilian economy were the 24.3% increase in investment in production, a rate much greater than that of January (15.2%), and family consumption, which went from 10.2% in January to 10.5% in February.
Strong demand led the industry to increase its output, which went from 11.5% to 13.4%. Other productive sectors surveyed have also grown, but at a lower rate: agriculture grew by 2.6%, and is recovering after a -0.7% drop in January, and the services sector grew by 4.7%, a slightly lower rate than the one recorded in January (4.9%).
The Market Indicators manager of Serasa Experian, Luiz Rabi, stated that the significant increase in investment is linked not only to machinery and equipment purchases for modernizing the factory park, but also to an increasingly dynamic civil construction industry. "In addition to projects linked to the [Brazilian federal government’s] Growth Acceleration Programme (PAC), consisting mainly of infrastructure works, there is also housing construction work underway," said the economist.
According to him, the fact that imports have risen by 44.1%, a rate much higher than that of exports (13.3%), is explained by both the appreciation of the Brazilian currency (real) against the dollar, and strong domestic consumption. Some of the purchases made by Brazil in foreign countries concern goods geared towards investment in production, but imports also include many products that had been receiving fiscal incentives, such as automobiles, for instance, explained Rabi.
Based on the indicators used for calculation in the survey, the economist forecasts that the GDP should grow by 6.2% in 2010, a higher rate than those of the International Monetary Fund’s revised projection, which is 5.5%, and the Focus bulletin of the Central Bank of Brazil (5.8%).
According to the estimates of Serasa Experian, activity will tend to decrease in the second quarter due to the "withdrawal of fiscal incentives to automobile purchases and the effects of the raised interest rates policy."
*Translated by Gabriel Pomerancblum
