MercoPress. South Atlantic News Agency

Brazilian think tank forecasts second quarter upturn

Brazil has survived the worst of the global financial crisis and could see an upturn as early as the second quarter, the state-funded Institute for Applied Economic Research, or IPEA, said this week.

The circumstances that led to a "Black December" for Brazilian industry could brighten soon thanks to steps already taken by President Lula da Silva's government, such as tax cuts and moves to unfreeze domestic credit markets, IPEA said. "Various elements exist that permit us to infer a possible improvement in the country's economic conditions in the coming months, or at least in the second half of 2009," according to the report. Release of the IPEA analysis coincided with comments from Trade and Industry Minister Miguel Jorge pointing to encouraging signs from Brazil's manufacturing sector. He cited new hiring by some textile firms, a recovery in vehicle sales and the absence of the feared flood of cheap imports from other developing countries seeking alternative outlets amid deep recession in the rich world. "We are optimists and think that we will be able to get through the crisis better than various countries in a more serious situation" Jorge said. IPEA's director of Social Research, Marcio Wohlers, told a press conference that last month's boost in auto production and increase in electricity consumption make it possible to envision an economic turnaround in the near future. "The possibility that industry's Black December will be repeated in the first quarter is very small," he said. Brazil's industrial production was down 12.4% in December from the previous month and off 14% compared with December 2007, the biggest one-year drop since the government started collecting data. Regarding credit, IPEA said that after big declines in October and November, the volume of lending in December was roughly the same as in September, before the crisis. Brazil is Latinamerica's largest economy and has implemented several financial and economic packages to help jobs and spear bank lending and credit access for the country's industry and consumers.