Brazilian economy recovers one year after crisis

A year after the collapse of Lehman Brothers, which triggered the worst economic downturn in decades in the world, the Brazilian economy has resumed growing, officials said.

“Today is a day for celebration,” Finance Minister Guido Mantega announced on Tuesday during a meeting of the Economic and Social Development Council (CDES). “Brazil is already leaving the crisis behind; it is one of the first countries to do so.”

The minister’s optimism was shared by Brazilian President Luiz Inacio Lula da Silva, who believed that the worst of the crisis had passed, paving the way for investments that were postponed during the crisis.

According to the president, if Brazilian businessmen invest now, they would be in a better position to trade with their U.S. and EU partners in three or four years, once those countries had recovered from the economic turmoil.

Lula’s statement was supported by the Central Bank’s President Henrique Meirelles. Meirelles said Brazil had already shown that it was able to overcome the crisis and keep growing; now it was time for businessmen to take a leap of faith.

“It is important that businessmen believe (in their country) and go back to investing,” he said.

According to Meirelles, Brazil had some advantages which allowed the country to recover faster from the crisis, such as a huge domestic market, which was growing at a 9.3 percent rate and made the country less dependent on foreign demand.

Brazil also had a lower inflation rate and an annual rate of investment returns at almost 20 percent at the beginning of the crisis.

Additionally, Meirelles said the government had taken the right anti-crisis measures at the right time, which contributed to a better economic situation now.

Minister Mantega agreed that the government’s measures played an important role in the Brazilian economy’s recovery. According to him, the tax cuts, interest rate cuts, and the release of 100 billion reais (55 billion U.S. dollars) in compulsory bank deposits helped stimulate the economy and minimized the damages caused by the crisis.

The measures seem to have paid off: last week, the Brazilian Institute of Geography and Statistics (IBGE) announced the economy grew 1.9 percent in the second quarter compared to the first. This means that the country was no longer in recession.

Meanwhile, retail sales had returned to pre-crisis levels, and both credit and the consumer confidence levels had improved significantly.

In 2009, the Brazilian government expects a GDP growth of 1 percent, overcoming the bad results registered in the first quarter. The market’s latest projections were for a 0.15 contraction in the economy, but even those estimates have improved in the past few weeks.