MercoPress. South Atlantic News Agency

Brazil's GDP expanded 2,7% in Q1.

Brazil's GDP expanded 2,7% during the first quarter of 2004 compared to the first quarter of 2003 confirming the economic recovery tendency of the country's economy reports the Brazilian Geography and Statistics Institute, IBGE. According to IBGE, Brazil's GDP in the first quarter of 2004 reached 124,3 billion US dollars, that is 1,6% expansion over the last quarter of 2003.

IBGE also points out that investment and savings in the first quarter of 2004 increased 18,7% and 23,4%.

Carlos Lemos from IBGE said the latest performance data confirms the Brazilian economy has began expanding again after experiencing a 0,2% contraction in 2003, the first in eleven years.

However Mr. Lemos underlined that the current level of investment 19,3% of GDP remains insufficient to ensure the Brazilian government's growth target for this year, 3,5%.

In related news the Industry Confederation of Rio do Janeiro, Firjan, reported that industrial sales expanded 29,7% last May compared to a year ago and 24,9% over April. In the first five months of 2004, industrial sales accumulated an 8,95% growth, the highest since 1992 said Firjan. But workers payroll actually contracted in May 0,77% compared to the same month a year ago, and 1,9% compared to April 2004.

Nevertheless Firjan's president Eugenio Gouvea Vieira argues that the industrial payroll in the first five months of this year increased 2,81% over the same period in 2003. Similarly the number of hours worked during May in Rio do Janeiro's industry increased 1,45% over April, and 3,76% over May 2003. Mr. Gouvea Vieira also warned that idle capacity in industry has dropped dramatically and is reaching a point where investments are urgently needed to keep up with the expanding demand, mainly from overseas.

Overall industry is working at 82,43% capacity with the metal and paper and pulp sectors above 90%. During May the most dynamic sectors compared to April were, chemical industry expanded 48,7%; machines and equipment 35,6%; metallurgy 11%. But colors are for Transport material (car industry and naval construction) which beat all records with a 252% jump over May 2003.

As to unemployment, Sao Paulo Brazil's main city and industrial hub reported a contraction to 19,7% in May from 20,7% last April., the largest monthly drop since 1992. However the number of unemployed in Sao Paulo still was 1.960.000 in May compared to 2.044.000 in April. Regarding industrial workers income statistics show it has ceased to decline and tends to stabilize after dropping 0,4% last April. Average monthly pay stands at 990 Reales equivalent to 330 US dollars.