MercoPress. South Atlantic News Agency

Brazilian economy picking up speed.

Brazil's economy is recovering strongly after last year's contraction according to the latest release from the Brazilian Geography and Statistics Institute, IBGE.

GDP during the second quarter expanded 1,5% compared to the previous quarter and 5,7% over the same period a year ago, with an annualized half year expansion of 4,2%.

During the first quarter Brazilian GDP expanded 4,2% compared to the same period a year ago, and between July 2003 and June 2004, growth was 1,7% according to IBGE.

Twelve consulting economists had forecasted a 1,25% growth in the second quarter of 2004 compared to Q1 and 4,7% over 2003 Q2.

Last year, the first of President Lula da Silva's four year period, the Brazilian economy contracted 0,2% mainly because of a very poor performance during the first half of 2003.

IBGE points put that the economy's performance in the first half of 2004 was the best since 2000 when it reached an annual expansion of 4,7%.

During the first half of 2004 agriculture expanded 5,7%; industry 4,7% and the services sector 2,8%.

The Brazilian economy is forecasted to grow 4% this year, and 4,5% according to the most optimistic analysts.

Another encouraging data in line with a stronger economy was unemployment at federal level which experienced a third consecutive drop and in July stood at 11,2%.

Last April unemployment reached a 30 months record for Brazil, 13,1%, but in May dropped to 12,2% and in June 11,7%.

In the crucial area of metropolitan Sao Paulo, (Brazil's industrial heart) unemployment also dropped for the third consecutive month and stands at 18,5% of an active population of 1,8 million.

IBGE also points out that family consumption increased 3,1% during the first six months of 2004 indicating that the recovery of the economy is not only fueled by exports but also by a burgeoning domestic demand.