Brazil to inject stimulus after disappointing growth

Brazilian fans cheer during the Men's Football first round Group C match between Brazil and New Zealand on Day 5 of the London 2012 Olympic Games at St James' Park on August 01, 2012 in Newcastle upon Tyne, England.

Jeremy Hobson: Now to Brazil, which has been a bright spot in the global economy in recent years. But things are starting to slow down -- so today, the government is launching a stimulus package of sorts.

For more, let's bring in the BBC's Joao Fellett. He's with us from Brasilia. Good morning.

Joao Fellett: Good morning.

Hobson: So what exactly is the government of Brazil planning to do here to stimulate the economy?

Fellett: Well, Brazil's government is set to launch a series of measures, hoping to inject up to $50 billion into the economy over the next five years. The first part of this plan includes privatizing about 14 km of railways, roads. The government is also expecting to privatize ports to bring energy costs down to do some incentives for industry, some tax cuts.

The main reason is that growth in Brazil is predicted to be under 2 percent this year, which would be the weakest performance since 2009. And also a sharp slowdown from an impressive 7.5 percent rise in 2010.

Hobson: But you can't always have 7.5 percent growth. I mean, obviously the economy's going to slowdown. Why do they feel pressure to do this kind of stimulus right now?

Fellett: Well the country has a very large population, a very large poor population. And the government argues that it needs to keep high growth rates in order to include these people. So the recent weak results have been attributed mainly to rising debt rates among the population, and also the global downturn. So the government is acting with the tools it has at least to keep it higher than 2 percent.

Hobson: The BBC's Joao Fellett in Brasilia. Thank you so much.

Fellett: You're welcome.

 

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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