Infrastructure investment in Brazil 'will help lift growth'
Date added: 26th May, 2010 at 11:54
(view all articles from May, 2010)
Categories: Economy
Investment in infrastructure in Brazil will see the country's economy continuing to grow this year according to a report by the Organisation for Economic Co-operation and Development (OECD).
Brazil's economy has expanded quickly since the middle of 2009, driven by domestic demand and a fiscal policy stimulus leading to an increase in imports, the body said.
Although demand may start to slow in the near future as tax incentives are withdrawn, infrastructure investment in Brazil is likely to buoy growth, the body explained.
In an effort to keep the rapidly booming economy stable, all policies designed to stoke it have been withdrawn and official interest rates have been increased. This means that tax cuts introduced on durable goods has ceased. However, the OECD forecast that spending will continue regardless.
The organisation welcomed proposed spending cuts this year, finally predicting that Gross Domestic Product growth will fall to five per cent in 2011 from 6.5 per cent in 2010, while inflation will be brought more under control at five per cent in 2011 compared to 6.2 per cent in 2010.
Victor Munoz, managing director of the Sao Paulo office of private equity investor Denham Capital, recently recommended infrastructure investments in Brazil as a relatively low-risk venture.
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