To: THE ANT who wrote (93731 ) 8/20/2012 6:23:36 PM From: elmatador Respond to of 217700 Brazil: southern spring has started? signs that the wintry economic conditions in the southern hemisphere giant are giving way to spring. First, there were stronger retail sales and jobs growth. Then, there were signs of an expansion in gross domestic product in June and now a thawing of the blighted industrial sector. Brazil: southern spring has started? August 20, 2012 9:46 pm by Joe Leahy In Brazil there are more signs that the wintry economic conditions in the southern hemisphere giant are giving way to spring. First, there were stronger retail sales and jobs growth. Then, there were signs of an expansion in gross domestic product in June and now a thawing of the blighted industrial sector. This from Itau: The FGV’s (Fundacao Getulio Vargas) index of manufacturing confidence rose 1.5% in August from July seasonally-adjusted, recovering from drops in June and July. The “current situation” component climbed 3.1%, which bodes well for activity in the short term. Expectation about the future fell 0.2%. Capacity utilisation rose to 84%, from 83.7%. It is dangerous to read too much into temporary data. The government, in particular, has pumped up the auto sector with one-off tax breaks that have now apparently run their course. Also, Brazil’s trading partners, such as China, are looking weaker rather than stronger. But if the government of President Dilma Rousseff can pull off a recovery amid the global gloom, it will have a chance of winning back for Brazil its old favourable reputation among investors. From an investors’viewpoint, equally as important as any recovery, though, will be for the authorities to follow up with progressive reforms to encourage investment and for the government to avoid further ad hoc tinkering with tools such as the exchange rate. Brazil will need to show investors not only that it needs them but it likes them too.