- Title: BRAZIL: Growth slows in second quarter as boom fades
- Date: 3rd September 2011
- Summary: RIO DE JANEIRO, BRAZIL (SEPTEMBER 2, 2011) (REUTERS) EXTERIOR OF BRAZIL'S STATISTICS OFFICE, IBGE SIGN OUTSIDE IBGE OFFICE GENERAL VIEW OF IBGE OFFICIALS PRESENTING DATA ON THE COUNTRY'S GROWTH DOMESTIC PRODUCT IN THE SECOND QUARTER WAS RELEASED IBGE ECONOMIST REBECA PALIS IN NEWS CONFERENCE GENERAL VIEW OF REPORTERS VARIOUS OF REPORTERS TYPING AND TAKING NOTES PALIS PRESENTING DATA ON BRAZIL'S GDP CLOSE OF PALIS CLOSE OF SCREEN DURING PRESENTATION (SOUNDBITE) (Portuguese) IBGE ECONOMIST, REBECA PALIS, SAYING: "All economic activities had a growth slightly lower than the ones registered in this year's first quarter, except by information services, where we have seen especially the mobile telephony growing a lot." VARIOUS OF PEOPLE TALKING ON MOBILE PHONES
- Embargoed: 18th September 2011 13:00
- Keywords:
- Location: Brazil, Brazil
- Country: Brazil
- Topics: Economy
- Reuters ID: LVA5U3C7T9GZDL0S8HTNK5D6MYRH
- Story Text: Brazil's economy slowed in the second quarter as the industrial and farming sectors began to feel effects of a weaker global outlook and a fading of the country's boom.
Gross domestic product in Latin America's largest economy grew 0.8 percent from the previous quarter after a 1.2 percent expansion in the first three months of the year, the statistics agency IBGE said on Friday (September 2).
Agricultural output slumped and industrial growth fell sharply in the three-month period, but they were partly offset by Brazil's resilient consumers and robust investment. Compared with a year-ago period, the GDP still grew a relatively brisk 3.1 percent.
President Dilma Rousseff said the country would invest and cut taxes as a way to weather the global financial turmoil that has caused volatility on financial markets.
"We will face this crisis by consuming, investing, expanding and creating companies, cutting taxes, sowing and harvesting results of Brazil's cattle industry," she said during a fair on agriculture and cattle in Rio Grande do Sul state on Friday.
Growth was dragged down by a 0.1 percent quarter-on-quarter slump in the country's powerful farming sector, a key element of its export earnings, and meager 0.2 percent growth in industry.
Brazilian industries have struggled in the face of high interest rates and a strong real, which has made exports less competitive and led to a flood of imported products that are cheaper than locally manufactured goods.
Factors helping expansion included a 1.7 percent increase in investment, 1.2 percent growth in government expenditures and a 1.0 percent growth in consumer spending.
Consumer spending, which makes up about 60 percent of the economy, has been a key pillar of Brazil's strong growth in recent years.
IBGE economist Rebeca Palis said the services sector also remained robust.
"All economic activities had a growth slightly lower than the ones registered in this year's first quarter, except by information services, where we have seen especially the mobile telephony growing a lot," she said.
The slowdown has partly been engineered by Rousseff's government, which has spent months seeking a soft-landing for Brazil's overheating economy by trimming state spending and committing itself to fiscal discipline.
Signs have grown that the economy has entered a sharper slowdown in recent weeks, however, as a weaker global economy exacerbates a deceleration in Brazil after its breakneck -- and unsustainable -- expansion of 7.5 percent last year.
Slower growth may let policy makers advance two key goals -- bringing down nagging inflation and further easing its lofty interest rates.
But it also signals that Brazil, which has been a rare bright spot in the struggling global economy, risks falling behind fellow fast-growing emerging markets such as China and India. It could face further weakening of corporate profits and a continued slump in the Bovespa stock index that is already one of the world's weakest markets this year. - Copyright Holder: REUTERS
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