Crisis proves Brazilian economy's strength, says expert
- Source: Xinhua
- [11:39 August 28 2009]
- Comments
The worst of the 2008 international financial crisis proved that Brazil was more prepared than ever for a traumatic economic situation, a Brazilian scholar said Thursday.
Compared with similar turmoils in the past, Brazil had survived the latest crisis with more than reasonable reserves (210 billion US dollars), a controlled inflation rate and a GDP growth of 6.8percent in the third quarter, Luiz Guilherme Schymura, director of the Getulio Vargas Foundation's Brazilian Economy Institute (IBRE),said in an exclusive interview with Xinhua Thursday.
Schymura said the crisis had only a limited impact on service and agricultural activity, but heavily affected industry, especially in the durable goods sector, which covers vehicles, cell phones and household electric appliances.
The government's timely tax-cut measures had allowed the quick recovery of the sector, especially the automotive industry, the expert said.
Brazil's industrial production fell 20 percent in the last four months of 2008, and increased 7.9 percent from Dec. 2008 to June 2009. However, if the automotive industry's figures were taken from these calculations, the figures would be 15.3 percent and 2.6percent, respectively.
Schymura said the figures showed the clear role of the durable goods sector in the recovery process.
Furthermore, the employment rate had withstood the hardest time in the fourth quarter of 2008 and returned in July to the same level registered a year earlier, before the crisis, he said.
As for trade, although both exports and imports shrunk significantly, the comparatively stronger demand for exports from Brazil allowed it to enjoy a comfortable surplus of 18.5 billion US dollars.
In the case of basic products, Schymura said demand from countries such as China and other Asian countries ensured prices would remain advantageous and would not change drastically in the future.
Meanwhile, the export of manufactured products fell sharply as demand from the United States and Latin American countries dropped.
What could be observed here was the importance of basic products and the primary sector, the IBRE director said.
Schymura also said the economic difficulties Brazil underwent in the 1990s helped the country establish a sound financial system to get through the latest global financial turmoil.
The crisis served to prove that financial stability was not at risk and that fiscal discipline had been consolidated, Schymura said.
Additionally, Brazil's macroeconomic policy has been proved to be well-structured and provided clear results, the economist added.
