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DJ OECD: Brazil To Grow 4.8% In 2010 After Zero 2009 Growth82 days ago
SAO PAULO (Dow Jones)--Buoyed by strong consumer spending, Brazil's economy will stage a robust economic recovery in 2010 following a 2008-09 recession, according to a special report Thursday by the Organization for Economic Cooperation and Development.
The OECD forecast gross domestic product expansion of 4.8% for Latin America's biggest economy in 2010, following zero growth in 2009.
"Domestic demand is set to grow vigorously in the last quarter of 2009 and into 2010, supported by a still accommodative policy mix," the OECD said in its report.
Part of the impetus for growth is coming from Brazilian government policies that include credit expansion and tax cuts for many consumer goods.
But the tax cuts are causing the government's deficit to rise to potentially worrisome levels. The OECD, in its report, predicted a rise in the fiscal deficit to the equivalent of 3.5% of GDP in 2010 from a projected 2.0% of GDP this year.
Consequently, the OECD recommended the gradual withdrawal of fiscal stimulus measures starting early in 2010.
The report said, "A judiciously planned withdrawal of policy stimulus would be advisable from early 2010, if the recovery is well in hand, as expected."
Given such prudent policies, the OECD said Brazil's fiscal deficit could decline to only 1.7% of GDP in 2010.
Inflation, meanwhile, will likely remain stable at between 4.0% and 4.5% in 2009, 2010 and 2011, the OECD said.
-By Tom Murphy, Dow Jones Newswires; 55-11-2847-4519; brazil@dowjones.com
(END) Dow Jones Newswires
November 19, 2009 05:00 ET (10:00 GMT)
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