MercoPress. South Atlantic News Agency

Brazilian economy rebounds and returns to growth in second quarter

Finance Minister Mantega expects continued growth into 2010

The Brazilian government announced Friday that 2009 second quarter real GDP, adjusted for inflation increased 1.9% from the first quarter of 2009, according to data released by the Brazilian Institute of Geography and Statistics (IBGE).

This marks a return to growth from the contraction in the first quarter of 2009, when GDP fell 1%, possibly signalling the end of the recession.

“With this data, it is clear that Brazil's economy has rebounded from the global financial crisis“ said Finance Minister Guido Mantega.

”This performance defies analysts' previous forecasts and bodes well for 2010.Based on positive trends in industry, services and employment rates; we expect continued growth in the Brazilian economy next year“.

Brazil's growth was boosted by an increase of 3.2% in domestic demand, compared to the same period of 2008, and an increase of 2.2% in public administration consumption, over the same period.

These growth trends reflect the quick effect of the government's countercyclical measures.

The increase in real GDP in the second quarter of 2009 in the seasonally adjusted series primarily reflects an increase in industrial activity of 2.1%. Agriculture registered a decrease of 0.1% and services increased by 1.2% over the same period.

Brazil has poured money into large-scale public infrastructure projects, cut taxes on new cars and passed tax breaks on companies and individuals.

“The result of GDP growth in the second quarter is without doubt excellent news” said Central bank president Henrique Meirelles. “It shows that Brazil has already come out of a recession.”

The central bank chief said the results showed the efficacy of timely measures adopted by the government in late 2008 and early 2009 to head off an economic crisis locally.

“The result shows that the measures taken by the government and the central bank were adequate, taken in the right measure and at the right time,” Meirelles said.

Asked whether Brazil could definitively pull away from a technical recession seen in recent quarters to show annual growth in 2009 Meirelles replied “it's both possible and probable that Brazil will show positive growth in 2009”.