Bloomberg News

Brazil Rousseff Seeks Expanded Business Investments in 2013

December 23, 2012

After Brazil’s government took steps this year to boost productivity and consumption, the country’s businesses need to do their part by increasing investments in 2013, President Dilma Rousseff said today.

Plans to reduce energy costs and spur infrastructure investments will make the world’s sixth-largest economy more competitive by cutting costs, Rousseff said in a speech broadcast on national television. Lower taxes and interest rates may also facilitate business, Rousseff said.

Brazil’s $2.5 trillion economy is set to see the slowest two years of growth in more than a decade, as investments through September fell for the fifth straight quarter. In the wake of third quarter growth that was half economists’ forecasts, authorities this month have announced payroll tax reductions for the retail and construction industries, a package aimed at attracting billions of reais in port investments, and an extension of popular tax cuts on automobiles and consumer goods. Since August 2011, officials have also reduced benchmark interest rates to record lows, increased public spending and announced plans to cut energy costs by 20 percent.

“I call on business people to believe and invest in our country,” Rousseff said. “This is a government that trusts its people and its business community, and we respect contracts.”

Under Control

Flagging growth has failed to slow Brazil’s inflation, which is set to remain above the central bank’s 4.5 percent target for the third straight year. Consumer prices through mid- December jumped the most in 19 months on food and beverage costs, bringing annualized inflation to 5.78 percent. Brazil’s inflation will be lower next year compared to 2012, central bank President Alexandre Tombini said on Dec. 17.

“We kept inflation under control, we improved the exchange rate and we created conditions that allowed for interest rates to fall to the lowest level in history,” Rousseff said in today’s speech.

Rousseff said other priorities next year include investments in education and accelerating Brazil’s preparations for the 2014 World Cup. “At the start of 2013, we will inaugurate four more stadiums. We are in the final stretch of preparations to host the best World Cup of all time.”

The world’s second-largest emerging market is set to expand 4 percent in 2013, Finance Minister Guido Mantega said earlier this month. That compares with economists’ forecasts of 1 percent growth this year, which is down from 2.7 percent growth in 2011 and 7.5 percent in 2010.

To contact the reporter on this story: Matthew Malinowski in Brasilia at mmalinowski@bloomberg.net

To contact the editor responsible for this story: Sylvia Wier at swier@bloomberg.net


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