Country grows 9.85% in the quarter, says BC
O Estado de S. Paulo
The Brazilian economy grew nearly 10% in the first quarter of this year, above what most market analysts and the Ministry of Finance are projecting for the period - nearly 8%. That is what showed the new Index of Economic Activity of the Central Bank (IBC-Br), which ended the first quarter with high 9.85% over the same period of 2009. Compared to the fourth quarter of 2009, the IBC-Br increased 2.38% (which means, in annualized terms, growth near 10%). The data strengthens the analysis that the Brazilian economy is at very strong pace at the beginning of the year and it is necessary to put a brake on the level of activity.
The IBC-BR is an index created by the Central Bank to try to anticipate the result of the Gross Domestic Product (GDP) and it is the latest tool used by the Central Bank to assist in the definition of the basic interest rate (Selic). The Brazilian Institute of Geography and Statistics (IBGE), which officially discloses the GDP, will only announce the result of the first quarter on June 8. The IBC-Br considers the statistics on agriculture, industry and services on a monthly-basis.
The Chief-economist of bank Schain, Silvio Campos Neto, said the data of the Central Bank strengthens the concern around the level of economic growth and its impact on inflation or in the external deficit. "Indeed, the indicator shows strong growth well above what everyone understands the country is able to sustain in the long term", said Campos Neto, considering that the data of the first quarter still occur in relation to a year marked by the international crisis, that is, on a weaker basis, especially in the first quarter of 2009.
He emphasized, however, that the tendency of the economy is to slow down in the coming quarters, reflecting the better bases of comparison and the measures of the Central Bank and the Ministry of Finance of tighten fiscal policy. In such regard, Campos Neto defended an even greater increase of austerity in government spending in order to help contain the economy.