Brazil & Southern Cone - September 2007 (ISSN 1471-4431

The economy grew by 4.8%, year-on-year, in the second quarter. The growth figures were overshadowed, however, by the anti-inflation policies announced by the economy and finance minister, Danilo Astori. These have already triggered labour unrest.

In the first quarter, year-on-year growth was 6.9%. Quarter-on-quarter, growth in the April to June period was only 0.7% higher than growth in the first quarter. The quarter-on-quarter growth rate in the first quarter had been twice as fast, 1.4%. 

The change in the economy is occurring in agriculture. In the first six months it was flat compared to the same period of 2006. Quarter-by -quarter, there was a 1.9% year-on-year drop in the first quarter followed by a 1.6% year-on-year rise in the second quarter. What has been happening is that there is a structural change going on in the sector: farmers are switching from stock raising into arable farming. They have been lured by the high international prices for grains and oilseeds. Farmers are also cutting back on rice. The biggest increases are in soya, wheat, maize and sorghum. 

Inflation: In August the rate was 1.73%, double the July rate of 0.83%.