Lula: Brazil’s economy to grow 7% in 2010

Brazil’s President Luiz Inacio Lula da Silva said on Wednesday that the country’s economy would expand by 7 percent this year.

“We project an economic growth of no less than 7 percent in 2010 and we intend to create 2.5 million jobs,” the president said.

According to him, such a high growth expectation is possible due to the growing domestic market, the country’s solid banks and the government’s anti-cyclic policies.

The president reaffirmed the need for reforms of the international financial institutions, in order to prevent another financial crisis.

“It is necessary to end lenient standards and repress the financial speculation in the international commodities market,” the president said.

Finance Minister Guido Mantega confirmed the 7-percent growth estimation. He said that 2010 would be a year with high growth rates, as 2009 registered low figures due to the crisis effects.

Assuming that the economy will not be overheating this year, he said the inflation rate would meet the target set for 2010, which is of 4.5 percent with a tolerance of 2 percentage points. In the first half of the year, Brazil accumulated an inflation rate of 3.09 percent.

Earlier on Wednesday, Brazil’s Central Bank said that its Economic Activity Indicator (IBC-Br) totaled 139.55 points in May, accumulating a rise of 10.29 percent in the first five months of the year compared with the same period in 2009.

In May, the IBC-Br was stable compared with April. It was the first time in 16 months the indicator did not register a rise. The IBC-Br was up 9.35 percent last May.

From June 2009 to May 2010, the IBC-Br was up 5.21 percent from the previous 12-month period.

The fact that there was no rise in the economic activity in May does not worry the government. Labor Minister Carlos Lupi said there was no need to concern the figure of the central bank.

“(The economy) might not be expanding so much, but that is different from shrinking,” he said.

The IBC-Br, calculated monthly, is considered as a preview of the GDP figures. The indicator is also used to help the Central Bank’s Monetary Policy Committee determine whether to modify Brazil’s annual basic interest rate.