MercoPress. South Atlantic News Agency

Drop in Brazilian investment

Investment in Brazil in 2003 will be the lowest in four years according to a release from the prestigious Getulio Vargas Foundation, FGV, following a survey of 423 companies.

The report indicates that the 423 companies have plans to complete investments of 2,87 billion US dollars in the current year, compared to 3,07 billion US dollars in 2002, 4,05 billion in 2001 and 3,25 billion in 2000.

The investment/sales ratio is also the lowest in four years, 5,2% against 8,2% in 2001 when Brazilian industries were preparing for the energy crisis that plunged the country into rationing and brown outs.

The findings of the report coincide with clashing efforts from two crucial Brazilian ministries, the Planning office that is preparing the 2004/07 investment program and needs funding, and the Finance Ministry obsessed with the target of a primary surplus of 4,25% of GDP, built on a policy of extremely high interest rates and rigid fiscal discipline.

However Brazilian Central Bank officials are confident that the economy and investment will begin picking up in the last quarter of 2003, since "mid term interest rates (21%) are actually below the current basic rate of 24,5%".

Brazilian president Luiz Inacio Lula da Silva in a rare interview with a Sao Paulo magazine staunchly supported the current economic policy of Finance Minister Antonio Palocci, who has been under constant flack from the extreme left of his own party.

"Who ever speculates against Palocci is a looser; who ever wants to win with speculation, I personally recommend Antonio", said President Lula da Silva.

Mr. Palocci's policy to reduce inflation and increase consumers and investors confidence has seen unemployment jump to a national 13% average and above 20% in the industrial heartland of Brazil, Sao Paulo.

"With economic policies, it's not possible to have everybody happy and on your side", admitted President Lula da Silva.