Brazil economy seen growing faster in 2012
Alexandre Antonio Tombini, who was speaking to reporters on the sidelines of a banking conference in Mumbai, said economic growth would be close 3 percent in 2011.
An overvalued exchange rate, high taxes and other costs have kept industrial production flat in Brazil for the better part of two years, despite an economic boom in other areas of the economy such as consumer spending.
“(The) economy is picking up some speed as we speak and Brazil (is seen) growing more in 2012 than in 2011 and growing
more in second half of the year than in first half because of lags involved in monetary policy,” Tombini said.
The central bank said last week structural changes to the Brazilian economy are helping to pave the way for lower interest rates, a sea change for a country that has long had some of the highest borrowing costs in the world.
In its minutes released late January, the central bank said it would keep slashing rates into single digits. The bank cut
its benchmark Seltic rate by a half percentage point to 10.5 percent on Jan. 18. It was the fourth reduction in a row since
August.
Tombini said there is room for further monetary easing without jeopardizing the central bank’s inflation target of around 4.5 percent in 2012. Private economists predict inflation will likely end the year around 5.3 percent, down from last year but well above the center of the official target. Tombini said the gains in the real, which has risen sharply in 2012, have been in line with other currencies. “2012 started on an optimistic note as far as markets are concerned. So, this is reflected in currencies around the world, real included.” Tombini said the country’s foreign exchange reserves were modest as compared to the size of the economy and other countries.
