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Lack of reforms agenda frustrates Brazilian industry

Wednesday, December 20th 2006 - 20:00 UTC
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Brazilian manufacturers expressed Tuesday their “frustration” given the absence of an official reforms agenda to help thrust economic growth next year which is forecasted to be in the range of 3.5%.

"If we don't address the reforms agenda, we'll have to share year after year the same frustration", said Armando Monteiro president of the powerful Brazilian Confederation of Industries (CNI) during an evaluation of the outgoing year and prospects for 2007. According to CNI economics department, the Brazilian economy is set to expand 2.7% this year and 3.5% in 2007, when President Lula da Silva's second mandate begins. Brazil's growth for several years has been below that of other competing major emerging countries and of most of Latinamerica. "For the last eleven years we've been expanding far less than the rest of the world" said Monteiro recalling that the International Monetary Fund has forecasted 5.2% growth for the region this year", said Monteiro. The CNI reports targets as the mayor obstacle for Brazil's development as "the strong and continuous expansion of current government expenditure", estimated in 13%, far above Brazil's GDP growth which is damaging "for savings and means higher taxes". "Government savings are essential for achieving money value public works investment, particularly in infrastructure", insisted the report. Monteiro demanded "strong action" to help reduce the social security deficit, although President Lula da Silva anticipated his next government will "rationalize performance". "Conditions to grow above the 3% threshold are currently absent", said Monteiro in spite of praising some positive aspects of the government's economic policies such as cutting basic interest rate from 18% at the beginning of 2006 to the current 13.25%. This week President Lula da Silva's administration is scheduled to announce a package of measures to promote economic activity and exports. Last October Lula da Silva was re-elected for another four year period, promising among other things annual GDP growth of 5%.

Categories: Economy, Brazil.

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