Weekly Report - 1 June 2004

BRAZIL | Growth outlook. Brazil's GDP grew in the first quarter by 1.6% on the previous one, which took it 2.7% higher than a year earlier. First-quarter growth was driven mainly by agriculture, which was up 6.4% year-on-year; industry was up 2.9%, services 1.2%. Most of the demand came from abroad: exports were up 19.3% y-o-y, 5.6% of the last quarter of 2003. The government has projected 3.5% growth for this year as a whole, which means that the rate must accelerate considerably. In the 12 months to end-March, accumulated growth was nil (as against -0.2% for 2003 as a whole).
One discouraging prospect announced by Ibge, the statistical institute, is that the grains harvest now looks like being smaller, not larger, than last year's. Another is that domestic demand continues to be weighed down by high unemployment. In April it reached a record 13.1% in the six main cities, the highest since new methodology was introduced last October. This politically sensitive indicator could look better if the government finds the funds for a new methodological change: the incorporation of data from small cities and rural areas, where 75% of all job creation took place in the first quarter.

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