Brazil’s economy to contract 0.8 percent this year and grow by 4 percent in 2010

15 July 2009

Sao Paulo, Brazil, 15 July – The Brazilian economy will this year see contraction of 0.8 percent and growth of 4 percent in 2010, the secretary-general of the Organisation for Economic Cooperation and Development (OECD) said Tuesday in Sao Paulo.

On a visit to Brazil, Angel Gurria said that a return to growth in 2010 was a result of stimulus policies adopted by the government, which had allowed the country to stand up to the global crisis, “better than many other countries.”

Currently, the Brazilian economy is in a technical recession, after posting a drop in growth of 3.6 percent in that last quarter of 2008, and of 0.8 percent in the first three months of this year.

Angel Gurría ñoted that there was room for further cuts in interest rates as a way of stimulating the Brazilian economy.

Since January the Brazilian Central Bank has dropped base interest rates from 13.75 percent per year to 9.25 percent, which is the lowest level in the country’s history.

The secretary-general of the OECD said that Brazil’s “biggest challenge” would be to contain the rise in public expenditure, which in 2008 totalled 32.5 percent of GDP.

The OECD is an organisation that brings together 30 developed and developing countries, with which Brazil has cooperation agreements. (macauhub)