Rio de Janeiro – The economy of Brazil grew 9% in the first quarter of this year as against the same period in 2009, the largest expansion since the figure started being recorded.
Industry grew 14.6%, followed by the service sector, with 5.9%, and agriculture, 5.1%. Gross fixed capital formation (investment in machinery and equipment) rose 26%, civil construction grew 14.9% and imports of goods and services, 39.5%
In comparison with the fourth quarter of 2009, the growth in the Gross Domestic Product (GDP) – all goods and services produced in the country – up to March reached 2.7%, the highest for the period since 2004. Industry was the sector that presented the greatest expansion, with growth of 4.2%. The agricultural sector expanded 2.7% and services, 1.9%.
The figures were disclosed on Tuesday by the Brazilian Institute for Geography and Statistics (IBGE) and are included in the Quarterly Accounting.
In a press statement disclosed by the Ministry of Finance, minister Guido Mantega spoke about expansion of GDP in the first quarter of 2010. “I was very pleased with the result. It was greater than I expected. I expected 2.5%. It shows that the economy of Brazil posted one of the best recoveries in the world,” he said. The result, according to Mantega, is part of a set of measures of monetary and fiscal policies that were very successful. "In comparison with the international market, just China had growth of such magnitude. The result shows the vigour and dynamics of the Brazilian economy,” he said.
According to the minister, it is necessary to point out the quality of growth, mainly due to industry (4.2%) and the gross formation of fixed capital (7.4%) in comparison with the third quarter of 2009. Investment is growing 18% over the first quarter of 2009.
According to Mantega it is necessary to recall that this is taking place in comparison with a weak year (2009). "I believe that the first quarter was the peak of return to growth. All stimulation was in place: reduction of the industrialized product tax, a reduction in the compulsory loan made by banks and lower interest rates, which were at their lowest level. We also had the stimulus of government spending. I would also like to point out the growth in family consumption (1.5% over the fourth quarter last year),” he said.
In the second quarter, however, there are already figures showing a slowdown. "Growth this year should remain high, but the rate is already dropping. Taxes are being levied again, and that should make demand drop, the compulsory loan has been raised again and the benchmark interest rate has already risen 0.75%, the largest growth in any country. Apart from that, we had a 10 billion real (US$ 5.4 billion) cut in government spending,” said Mantega.
In the minister’s evaluation, the trajectory is for moderate growth and the country is heading for sustainable growth. "We cannot forget the base for comparison. Industry, for example, had negative growth in 2009. In 2010, the Brazilian economy should grow between 6% and 6.5%,” he finished off.
*With information from the Newsroom. Translated by Mark Ament
