Country grows 5.4% and investment breaks record
DCI - 03/13/2008
The Gross Domestic Product (GDP), index that represents the sum of the wealth produced in the Country, shows the economy grew 5.4%, reaching R$ 2.588 trillion (US$ 1.470 trillion) in 2007. That was the second greatest growth of the whole historical series, started in 1996, only behind the year of 2004, when the Brazilian economy progressed 5.7%. According to the Brazilian Institute of Geography and Statistics (IBGE), responsible for the survey, the growth was pushed by the domestic consumption of the families, which reached R$ 1.557 trillion (US$ 885 billion), as well as by investments. In the light of the offer, the prominence was the services sector, with the heavier weight on the GDP, operating R$ 1.441 trillion (US$ 819 billion). In the light of the demand, the investments stood out. The Gross Fixed Capital Formation (GFCF) amounted to R$ 449.558 billion (US$ 255.4 million) in 2007, at the highest level of the historical series adjusted by the new methodology of calculation of IBGE (Brazilian Institute of Geography and Statistics), that started to base the data in 1996. The GFCF had its fourth consecutive increase. In 2007, the increase was 13.4%, compared to the previous record of 10.4%, in 2006. The increase in the investments is the result of the effective rate of interest of the Selic (Special system for settlement and custody), which remained at 11.9% in the annual average, whereas in 2006, the average was 15.1% a year. This reduction pushed up the increase of the credit from free resources for companies, by 27.1%. The heavier weight in the investments came from the sector of machinery and equipment, with an increase of 19.3% last year. Regarding the civil construction, which represents the other 40% of the item, there was an increase of only 5.1% in the investments, which indicates that most of it was aimed towards the increase of the productive capacity. "This is a clear demonstration that there was a change in the pattern, with greater participation of the domestic market and strong investment activity, which is important to develop the base to move ahead in the growth", said IBGE's coordinator of National Accounts, Roberto Olinto. Alcides Leite, professor of financial market of the Trevisan Escola de Negócios (Trevisan School of Business), stresses the importance of the investments. "They provide sustainability to the economic growth without risk of suffering inflationary pressure and they are important for the potential GDP. For Olinto, there was a change in the growth pattern. Up to 2005, there was progress with the participation of the external market, through the exports, which resulted in a lesser participation of the internal part. Since 2006, the growth rate of the importations has exceeded the exportations'".