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To: Seeker of Truth who wrote (56663)	11/30/2004 1:40:43 AM
From: elmatador	Respond to of 74559

Brazil 3rd-Qtr Growth Likely Expanded 6.2% becoming tiger Brazil 3rd-Qtr Growth Likely Expanded 6.2% on Exports, Loans Nov. 30 (Bloomberg) -- Brazil's economic growth probably accelerated to more than 6 percent in the third quarter as lower interest rates boosted demand at home and exports of soybeans and cars surged. Brazil's gross domestic product expanded 6.2 percent in the July-to-September period from a year ago after 5.7 percent growth in the second quarter, the median estimate of 17 economists surveyed by Bloomberg showed. The expansion would mark the strongest back-to-back quarterly growth since 1995. President Luiz Inacio Lula da Silva said in an interview last week he is optimistic South America's largest economy is on a path of sustainable growth following a recession last year. The jobless rate fell to a two-year low of 10.5 percent in October, industrial production has climbed every month this year and inflation is about half the level of a year ago. ``None of the data available at the moment tells us that we shouldn't be optimistic regarding the prospects of economic growth,'' Lula said in the Nov. 23 interview in Brasilia. ``The economy is becoming stronger and therefore we can achieve the credibility that a country like Brazil needs to have.'' The benchmark lending rate in Brazil averaged 16.04 percent in the third quarter compared with 23.45 percent in the same period last year, helping boost demand for loans. Bank lending in Brazil surged 20 percent in the year through September. Riachuelo SA, a Sao Paulo-based clothing and linen retailer, expects sales to rise as much as 30 percent this year to 1.6 billion reais ($582 million), Fabio Rocha, Riachuelo's vice president, said in an interview. `Engine' ``Definitely credit is the engine behind such a process,'' Rocha said. ``A great part of our sales comes from credit card purchases. That's fueling a jump in sales.'' Exports, which the government forecasts will exceed one- fifth of Brazil's $522 billion economy this year, were a record $25 billion in the third quarter. The government is scheduled to release third-quarter GDP figures at 9:30 a.m. local time (6:30 a.m. in New York). Pirelli & C. SpA, Europe's third-largest tire maker, plans to invest $80 million to boost capacity by a quarter, said Giorgio Della Seta, chairman of Pirelli's Latin American unit. Exports represent 40 percent of the company's total sales from Brazil. ``This year has been outstanding,'' Della Seta said in an interview on Nov. 23. ``Next year will be the same.'' Brazil's Currency A rally in Brazil's currency this year threatens to slow export growth in 2005, Della Seta said. Brazil's currency has climbed 5.2 percent this year against the dollar to 2.7480 yesterday. Lula, in the interview in Brasilia, said the currency needs to weaken to between 2.9 and 3.10 against the dollar to bolster exports and help the economy expand for a second year in 2005. ``The future of exports will depend on the exchange rate,'' Della Seta said. ``We expect an exchange rate of about 3 reais to 3.2 reais per dollar by the end of 2005.'' Three central bank rate increases since September also risk slowing investment, Luiz Vilar de Carvalho, chief executive of Votorantim Cimentos, Brazil's biggest cement company, said at a news conference on Nov. 16 in Sao Paulo. ``The great barrier is the cost of capital,'' de Carvalho said. ``It is the great barrier for the growth of Brazilian companies.'' Interest Rates Interest rates -- discounting inflation -- are about 10 percent in Brazil after the central bank lifted the benchmark rate to 17.25 percent on Nov. 17 to stem inflation. Brazilian inflation quickened to 6.9 percent in the 12 months through October from 6.7 percent in September. The government forecasts economic growth of at least 3.5 percent this year and the creation of 2 new million jobs. Lula said in the interview he expects growth this year of 4.7 percent and at least 3.5 percent next year. Higher farming and industrial output and the first year of growth in construction in six years are also helping create more jobs. The unemployment rate fell in October to 10.5 percent, the lowest level since 2002, from 10.9 percent in September and from 13.1 percent in April. Brazil added 1.9 million jobs between Jan. 1 and Nov. 1, the best year for the Brazilian labor market since 1992, Lula said. The Brazilian economy also grew in the third quarter from the quarter, expanding a seasonally adjusted 1.2 percent, the survey showed. Oil Prices Higher oil prices and interest rates in Brazil and in most of the world's biggest economies may cool growth in 2005, said Christian Stracke, head of Latin American research at New York- based CreditSights Inc. Brazil's industrial output growth slowed in September in industries such as paper and pulp, vehicles, steel and health- care equipment, all of them export-oriented industries that operated close to full capacity for most of the year. Output rose 7.6 percent in September, the smallest gain since April. ``We reached peak growth rates in September,'' Stracke said in a telephone interview from Augusta, Georgia. ``The initial evidence suggests that the recent sluggishness in some industries is due to softer external demand and the effect of higher borrowing costs will be felt afterwards.''