Brazil & Southern Cone - October 2008 (ISSN 1741-4431)

Real annual GDP growth in the first six months of 2008 was 8.2%. Growth in the second quarter was 8.9% year-on-year, considerably faster than first quarter growth of 7.6%. The fastest growing sectors of the economy are investment (which rose 25% in the first six months), imports (up 21%) and exports (up 15%). Household consumption is rising, but at the sustainable rate of 8.6%, while government spending is rising at a rate of only 1.6% year-on-year. There are signs that consumers are beginning to take a few more economic risks: sales of consumer durables are rising (particularly clothes, shoes, motorbikes and cars).What is extraordinary is the growth in mobile telephones. The mobile telephone business in the country is now worth more than two of the traditionally economically crucial sectors, meat-processing and transport, put together. The economy has had a pretty good run over the past five years. It has now grown quarter-on-quarter for 21 consecutive quarters.  National GDP, however, is still comparatively small at US$8.3bn, according to the central bank.

Budget: The new government is coming under pressure to increase government spending. So far the appeals are for a modest increase of around 5%.

Inflation: In September consumer prices fell by 0.3%. They had risen by 0.6% in August. The September figure brought the 12 month inflation rate down to 9.1%. In 2007 inflation was 7.7%.