It plans to auction off operating licenses for oil and gas, electricity and infrastructure projects.

Four airports in the cities of Porto Alegre, Salvador, Florianópolis and Fortaleza are expected to be sold by March, along with two port terminals.

The government aims to raise US$ 24 billion from the concessions program, and will also offer contracts to private firms for a wide range of projects from building new roads to running mines.

The program includes the concession of an already built railway as well as the long-delayed auction of rights to oil fields and hydroelectric dams in the first and second half of 2017.

President Michel Temer, who took charge of the country two weeks ago following the impeachment of predecessor Dilma Rousseff, said the privatization plan will boost growth and jobs.

“We need to open up to the private sector because the state cannot do everything,” Temer told ministers.

The concessions will offer “realistic” rates of return and have guaranteed long-term financing from state banks or will be raised on capital markets through bond sales, said Wellington Moreira Franco, who is responsible for boosting private sector involvement in Brazil’s infrastructure.

“We will restore confidence by expanding the legal security for investors,” he said.

According to the Organization for Economic Cooperation and Development, Brazil’s economy contracted 3.8 percent in 2015, and is expected to shrink a further 4.3 percent this year. Unemployment in the country is in double digits and inflation is nearly 10 percent.

RT

More than 1.7 million Brazilians have lost their jobs over the last 12 months, according to Labor Ministry data, taking the total unemployed population to an estimated 11.8 million.

Wages discounted for inflation fell 3.0% from the same months in 2015 to an average of 1,985.00 reais (US$ 615.08).

The fall from grace of what was considered a vibrant emerging market until a few years ago cost Brazil its investment grade rating and contributed to destabilizing President Dilma Rousseff’s government.

The suspended president was removed from office by the Senate on charges of doctoring budget numbers.

GDP Down

Brazil’s Gross Domestic Product (GDP) closed out the second quarter of 2016 0.6% down from the previous quarter in the seasonally adjusted series, totaling US$ 461.18 billion.

Compared to the second quarter of 2015, the GDP shrank 3.8%. With the latest result, the cumulative GDP in the first six months of the year was down 4.6% as against the first six months of 2015.

The cumulative result for the four-quarter period ending in the second quarter of 2016 was down 4.9% from the comparable period a year before.

The Quarterly National Accounts survey was published by the Brazilian Institute of Geography and Statistics (IBGE).

Growth Forecast

The signs of economic recovery led the Brazilian government to increase the growth forecast for next year. Brazil’s GDP growth estimates increased from 1.2% to 1.6% for 2017, announced Finance Ministry Secretary for Economic Policies, Carlos Hamilton Araújo.

The official inflation forecast by the Broad National Consumer Price Index (IPCA) was kept at 4.8%. The numbers will be used to prepare the 2017 Annual Budget just submitted to Congress.

According to the secretary, the government will only release the effect of the increased economic growth on federal revenues when the bill is sent. If revenues rise more than expected, the government will not have to increase taxes to raise next year’s funds and meet the primary deficit target of US$ 43 billion in 2017.

According to Araújo, the country should report economic growth again in this year’s fourth quarter.

“In real terms, the industrial production has been increasing for four consecutive months. The Monthly Survey of Trade done by the Brazilian Institute of Geography and Statistics showed signs of steadying in trade, growing 0.1% in June. We have indications that the second half will report better performances than the first. In our baseline scenario, we expect GDP to grow in the fourth quarter compared with the third,” reported the secretary.

For 2016, the Secretariat for Economic Policies reduced the GDP contraction forecast from 3.1% to 3%. The IPCA projection was kept at 7.2%.

The economic staff’s estimates are more optimistic than the market’s. According to Focus Market Readout, weekly updated based on estimates from financial institutions published by the Central Bank, the country should end 2016 with GDP dropping 3.2% and an inflation of 7.31%.

For 2017, market analysts predict a 1.1% growth in GDP and 5.14%, in IPCA.

Interest Rates Unchanged

Brazil’s central bank kept interest rates at a decade high for the ninth straight time on Wednesday, but did not discard a cut rate later this year if stubbornly high inflation subsides. In a unanimous vote, the bank’s monetary policy committee, Copom, kept its benchmark Selic rate at 14.25%, its highest since July 2006.

In the usual release the central bank removed from its statement a previous reference to the lack of room to cut interest rates, but laid out the blueprint to lower borrowing costs.

“The committee judges that a loosening of monetary conditions will depend on factors that allow greater confidence on meeting the inflation targets at the relevant horizons,” the bank said.

The bank highlighted a reduction in uncertainties regarding the approval of austerity measures and easing food inflation as key factors to flexibilize monetary policy. The bank also said it will monitor the effects high interest rates and a subdued economy will have on the pace of disinflation.

In the statement, the bank reiterated it aims to lower inflation to its target of 4.5% in 2017. The central bank, now with Ilan Goldfan as chair, has missed that goal since August 2010 after years of heavy public spending and consumption-based stimulus.

The country’s stubborn inflation has raised worries among policymakers that it may threaten an economy they believe to be near a turning point as a political crisis eases and business confidence returns to Brazil. The bank’s willingness to sketch out the conditions needed to lower interest rates was interpreted as a clear signal borrowing costs could be lowered later this year.

Lower inflation is seen by many economists as key to bolster consumer demand and shore up an economy that is showing its first signs of recovery. An increase in investment in the second quarter after 10 straight declines has raised hopes that the worst of the recession may be over, official data showed earlier on Wednesday.

With the most controversial aspect of the political situation behind, the approval of the reforms to cap public spending and reduce pension benefits should help the central bank in keeping a lid on inflation and lowering price expectations for coming years.

MP/ABr

Brazilian companies cut staff across business sectors and regions. Manufacturing, construction and services firms laid off nearly 50,000 workers in each sector in October.

Brazil’s deep recession has already cost nearly 1.4 million jobs in the past 12 months. Even those who have kept their jobs are feeling insecure about the future, sending consumer confidence measures to successive record lows.

The Brazilian economy is expected to shrink more than 3% this year and 2% in 2016, in what would turn out to be its longest recession since the 1930’s.

The crisis, partly caused by market worries due to a political stalemate in Congress, has weighed on President Dilma Rousseff’s popularity. Opposition parties have demanded her impeachment just a year after her re-election, as her approval rating plummeted below 10%.

The Northern state of Pará, rich in agricultural and mineral commodities, had the steepest month-on-month decline in payroll jobs at 1.15%, labor ministry data showed.

About 95,000 jobs were trimmed in Brazil’s most populous region, the southern states of São Paulo, Rio de Janeiro and Minas Gerais.

Economic Contraction

Economic activity in Brazil contracted for the fourth straight quarter, central bank data showed as Latin America’s biggest economy plunges further into recession. The bank’s IBC-Br economic activity index indicates economic activity fell 1.41% in the third quarter from the previous three months.

That follows contractions of 2.09% in the second quarter, 1.05% in the first and 0.50% in the last quarter of 2014. The IBC-Br, a gauge of activity in the farming, industry and services sectors, fell 0.5 percent in September from the prior month.

The index also an early indicator of GDP. Brazil national stats office, IBGE, is scheduled to release third-quarter GDP data on December 1st.

Activity fell 6.2% in September from a year earlier, the steepest of a series of declines that started almost a decade ago. It is also feared that activity probably continued to fall at the start of the fourth quarter as industrial output plummeted and rising unemployment likely hit consumption.

Brazil’s economy has slipped into its worst recession in 25 years, hit by high inflation, rising interest rates and a confrontation between the Executive and Congress which only generates uncertainty and conditions the passing of tax hikes and spending cuts by president Dilma Rousseff’ government.

Independent economists expect the economy to contract 3.10% this year. Activity is also expected to contract next year in what would be the longest recession in Brazil since the Great Depression of the 1930s.

Mercopress

“We certainly cannot speak of a crisis,” Tombini told lawmakers at the Senate’s economic affairs committee. “I want inflation to be lower than it is now, but it remains under control.”

Tombini’s remarks are at odds with the view of some economists and investors, who have noted recently that inflation is running above the central bank’s target range and economic growth has ground to a near halt.

President Dilma Rousseff’s main contender in the October presidential election, Senator Aécio Neves, has recently described this outlook as one of “stagflation”.

In Tombini’s view, monetary policy is helping control inflation pressures, which should fade over the next year. He also said economic growth will recover in the second half of this year. Tombini did not speak of possible rate hikes, but he reiterated that the bank is not considering reducing its benchmark Selic interest rate in the near future from its current 11%.

Tombini also said there is no contradiction between high interest rates and the recent measures that injected up to 20 billion dollars in credit into the country’s ailing economy.

The credit stimulus, aimed at ensuring financial stability, is known as “macro-prudential measures.” When risks to the banking sector subside, the central bank may allow more credit to flow into the economy, Tombini said.

Likewise Mantega discarded recent criticism. “We have a more favorable outlook and see quicker growth in the second half of the year, although 2014 will be a sort of transition year for us and for everyone in the world, we believe that we have the conditions to grow more next year.”

Mantega anticipated that the recovery ahead would be gradual and that the Brazilian economy will not immediately see the 4% annual growth rates that made it a Wall Street darling in the past decade.

Prices in Brazil have eased on a monthly basis since March, but 12-month inflation rose to the 6.5% ceiling of the government official target in June. The government’s inflation target is the middle of a 2.5 to 6.5% tolerance band.

Mantega, who declined to confirm whether he will stay on after eight years in the job if Rousseff is re-elected, ruled out any sharp increases in the price of electricity and fuel next year as inflation pressures subside.

But he signaled that authorities could hike fuel prices later this year. Brazil has not yet raised gasoline prices in 2014.

“Every year we adjust fuel prices … that’s the rule,” he said when asked if fuel prices could be raised this year.

The market expects the government to increase energy prices next year after keeping them artificially low for more than a year, stoking already high inflation.

Many economists also say the Brazilian economy may have fallen into recession after a likely contraction in the second quarter and a possible downward revision in first quarter growth numbers. But Mantega was emphatic, “there is no recession, no stagflation” and added “the use of these terms is an exaggeration.”

Mercopress

Last week, the forecast was 1.05%. As regards 2015, the estimate was maintained at 1.50%.

The projection for industrial output growth, this year, has also worsened, moving from a decline of 0.9% to 1.15%. As regards 2015, the estimate was revised from 1.8% to 1.7%.

The forecast for trade surplus (balance of exports minus imports) was revised from US$ 2.01 billion to US$ 2 billion for this year, and from US$ 9.4 billion to US$ 9.8 billion, in 2015.

The estimate for current transaction deficit (goods and services imports versus exports) was revised from US$ 80.75 billion to US$ 81.5 billion, in 2014, and from US$ 75 billion to US$ 74.1 billion, this year.

The Brazilian Central Bank’s Economic Activity Index (IBC-Br, seasonally adjusted) was down 0.18% in May from April. This was the second month-on-month decline this year. According to the revised figures, the decline in February was 0.09%.

May-on-May, activity was down 0.17%, based on unadjusted figures, since equal periods are being compared. Economic activity was up 1.93% in the 12-month period ended May and 0.58% year-to-date.

The IBC-Br is a means for assessing Brazilian economic activity. The index provides information on activity levels in the three sectors of the economy: industry, retail and services, and agriculture.

Outbound United States dollars have outnumbered inbound in Brazil. The foreign exchange flow showed a US$ 5.427 billion deficit in the first two weeks of July.

The negative result was both a result of trade operations (export- and import-related foreign exchange operations), at US$ 1.312 billion, and financial operations (investment in bonds, profit and dividend remittances to foreign countries and foreign direct investment, among other operations), which ran a US$ 4.114 billion deficit.

Year-to-date through July 11, the Forex flow showed a US$ 1.280 billion deficit. During the period, trade operations posted a US$ 1.578 billion surplus and financial operations had a US$ 2.858 billion deficit.

Santos

The port of Santos, in the state of São Paulo, moved 9.8 million tons in June, up 5.4% from June last year. It was the best result ever for the month. Export volume was up 8.1%, offsetting a 0.7% decline in imports June-on-June, as per the results released by state ports authority Companhia Docas do Estado de São Paulo (Codesp). Container shipping was up 15.4% to 325,000 TEUs (twenty foot-equivalent units).

The export products with the highest volumes shipped in June were soy bean, bran and oil (2.3 million tonnes), up 18.9% from June 2013; coffee bean (132,000 tonnes), up 47.2%; gasoline (146,800 tonnes), up 50.6%; and fuel oil (218,600 tonnes), up 85.1% from June 2013.

The highest import volumes were those of liquefied petroleum gas (84,700 tonnes), up 58.6%; and naphtha, a petroleum product, at 41,400 tons, up 632%.

H1 throughput was 52.9 million tonnes, down 1.6% from H1 2013. Container shipping, which has higher added value, was up 8% to 1.7 million TEUs.

H1 exports stood at 36.7 million tonnes (down 3.1% from H1 2013) and imports amounted to 16.1 million tonnes (up 1.9%). The 14.8% decline in throughput of sugar, the most shipped product at the port, had a significant impact on the decline in exports, as did maize (-52.5%) and pulp (-27.0%). H1 export highlights included soy bean, bran and oil (up 8.7%), coffee bean (19.8%) and gasoline (15.6%).

Imports of fertilizers, the main import product at the facility, were up 5.4% to 1.3 million tonnes, liquefied petroleum gas imports were up 58.6% to 462,400 tonnes, wheat imports were up 19.8% to 772,100 tonnes and naphtha imports were up 111.9% to 146,600 tonnes.

ABr

Chile meantime is forecasted to grow 4.1% in 2010 and 5% the following year, following a 1.8% contraction in 2009.

Mexico is the only Latin American member of OECD while Brazil, Latin America's largest economy and Chile are candidates to become full members of the club which brings together the world's 30 most industrialized countries.

"Mexico has suffered its worst recession (8%) since the foreign exchange crisis of 1994," points out OECD indicating lower oil prices, a fall in exports, the sanitary emergency with the outbreak of the A/H1N1 virus flu plus less remittances and tourism have had a devastating impact.

However things have begun to change with the recovery of the US economy and an increase in the price of oil, which have seen a "significant deceleration in the fall of economic activity and signs of recovery in some sectors".

OECD estimates that with the fiscal stimulus, "recession bottomed out in the third quarter of 2009 and Mexico should begin growing modestly in the first quarter of 2010.

Regarding Brazil, OECD estimates strong growth in the next two years and no expansion this year. The forecast is an improvement from the previous report which was estimating a negative 0.8% in 2009 and 4% in 2010.

"Strong domestic demand boosted by flexible policies," have helped the Brazilian economy overcome the situation and as early as 2010 "the government could begin to roll back budget incentives as the economy consolidates".

As to Chile it has suffered the impact of the collapse of world trade and commodities prices which make a small, open economy very dependent on mineral and agriculture exports, "highly vulnerable".

OECD concludes that the Chilean economy, after suffering a contraction this year, should begin gradually to recover next year and reach above potential growth in 2011.

Total foreign sales from Brazil dropped 23%, stunted mainly by the bad performance of business with the United States, Europe and other countries in Latin America.

“We are granting priority to these markets (emerging). We have removed the focus from the United States and Europe, as they are not going to buy products at this moment, and we are trying these (new) locations,” explained Karina Botelho, export manager at Formanova, a furniture factory that is headquartered in Palhoça, Santa Catarina. The company has been concentrating mainly in the Middle East and Africa.

The search for diversification of markets in times of crisis is generalized among exporters. The last Industrial Analysis – Foreign Trade, disclosed by the National Confederation of Industries (CNI) late last month, showed that 60% of the 1,307 companies approached plan to go after new destinations to mitigate the effects of the crisis in their foreign sales.

“Companies are seeking new markets, but not necessarily managing,” said the vice president at the Brazilian Foreign Trade Association (AEB), José Augusto de Castro. “Some emerging markets have managed to have even better performance, like China, India and some countries in the Middle East. It is an option, but everyone is going in that direction, so it is necessary to be competitive or to have a foot in the destinations,” said the executive manager at the Research Unit at the CNI, Renato da Fonseca.

“Everybody is having the same idea,” said Castro. “There are many successful cases but other companies are not managing,” added Fonseca.

In the evaluation of both experts, Brazil has two realities when talking about trade: exports of commodities, which are remaining relatively high due to the demand in large emerging economies, and that of industrialized products, which are suffering not just due to the crisis, but also due to the appreciation of the Brazilian real against the dollar, making products more expensive abroad, and also due to the high tax burden.

The search for new destinations in the current scenario is not an easy task. In the area of manufactured products, according to Castro, competition with Chinese products, which are cheaper, in a global market that is already retracted, makes business for Brazilian companies even more difficult.

“With the retracted demand, exporters have to offer prices,” he said. According to him, China has even been occupying space in traditional markets for Brazil, like those of South America.

According to Fonseca, apart from lowering costs to make prices more competitive, businessmen must research the market and adapt their products according to the needs of different clients.

That was what MGR, a factory in the marble and granite sector from Rio de Janeiro, did. According to the trade manager at the company, Ronan Moreira, even before the worsening of the crisis, in September last year, the company started feeling lower demand in the United States and started seeking other alternatives. “We preferred to move on rather than being caught by surprise,” he said.

The alternative, in the case of MGR, was the Arab market. In November last year, the company exhibited at the Big 5 Show, a fair in the building sector that takes place in Dubai, in the United Arab Emirates, and in January 2009, MGR participated in a mission to North Africa promoted by the Ministry of Development, Industry and Foreign Trade.

According to Moreira, the activity worked out and business in the region started turning up. Entry of the products in a new market, however, required extra effort by the company. “We had to bend, as demands (in the region) are a little different, and the material is different from that we sold to the US, and they are not buyers of ready products,” he said. Whereas in North America the company exported products ready for installation, in the Middle East the demand is for semi manufactured plates.

“The lower demand among traditional markets may be compensated by emerging nations, but the competition is tough and it is necessary to adapt,” said Moreira. Prices also had to be negotiated. “We, however, already have an export culture, which makes things easier. We have material, competitiveness and conditions to respond rapidly,” he said. An advantage, according to him, is that in some countries, especially in North Africa, there is little variety for products available, but there is, however, avidity for novelties.

In the same lines, the national cosmetics industry, which was already working hard in emerging nations, decided to further expand its focus on these markets. In the case of the Middle East, for example, the foreign trade analyst at the Brazilian Association of Toiletries, Perfumes & Cosmetics Industries (Abihpec), Silvana Gomes, said that the sector has not yet felt lower exports to the region, despite the crisis.

Exports of cosmetics, however, according to José Augusto de Castro, from AEB, are among those least suffering the economic turmoil. In fact, Silvana said that there was no impact on sales to traditional markets, especially Latin America. With regard to richer destinations, like Europe, the Brazilian industry operates in specific niches, like organic products, which continue presenting demand.

“But we cannot ignore what is taking place in the world,” said Silvana. “There is concern with exports and we are turning funds to markets that may be expanded,” he added. In this respect, the trade promotion project, which Abihpec is developing in partnership with the Brazilian Export and Investment Promotion Agency (Apex-Brasil), should advance in eight emerging destinations considered priority. “The focus changed a bit, and we are eyeing the United States and Europe a little less,” he said.

He pointed out, however, that this does not mean that the sector should abandon developed nations, as he believes in recovery in the short run. In the same line, Renato da Fonseca, from CNI, pointed out that the search for alternative markets should not supply the contact of traditional destinations. It would be ideal, according to him, for the company to have a diversified portfolio, and losses in a market may be compensated by other gains.

For those who have great business in developed nations, opportunities in the emerging markets do not compensate the losses, but they help. “These regions (the Middle East and North Africa) were not our strong point, but they have been generating very favorable results. Nothing that wonderful, after all, the crisis is global,” said Karina Botelho, from Formanova. “But it has been the solution,” he added. The company, which produces high-end furniture, saw shipments to the United States, Europe and Latin America drop, although there is still demand in the latter case.

Alternative supplier

If the crisis has made exporters seek new markets, on the contrary direction, importers are also seeking suppliers capable of offering products at a good price range, without, though, forgetting quality. Baumer, a São Paulo state medical and hospital equipment factory, has been identifying this phenomenon in practice.

“In times of crisis or in good times, (the field of) health does not suffer much. It is always a priority,” said the director of the international area at the company, Wagner Mazolli. However, according to him, emerging nations that usually buy from “great players” in the sector, headquartered in Europe and the United States, have started seeking alternatives, “countries like Brazil, which have technology and price.” “This represents an opportunity for expansion for Brazilian companies,” he said.

According to the executive, Baumer, which exports mainly orthopaedic implants and devices for sterilization, has been doing good business with clients that used to buy from the United States and Europe. “But prices (of North American and European products) have not changed, and the crisis only accelerated (this tendency of search for new suppliers),” he said.

Still, the US and European markets are very difficult for the Brazilian industry due to local competition. There companies only operate in very specific niches, like a line of prosthetics for patients with bone tumors.

“The tendency today is the South, South America, Africa, Southeast Asia and the Arab countries. There are great opportunities for those who have quality and price,” said Mazolli. The bet on emerging nations is so great that the company, which currently has 23% of revenues connected to exports, has as its target reaching the total of 40% by 2011, despite the crisis.

Anba

"As the fall last year was a big one, you have a slow recovery. This recovery will happen little by little,  there won't be a feverish growth, in the second quarter and in the third. We are talking about a gradual improvement," the minister said.

Mantega says that Brazil should grow between 3% and 4% in the last quarter of 2009 and the same percentage in 2010. For this year, the minister forecasts growth of 1%. According to him, the result of the Gross Domestic Product (GDP) in the first quarter of the year is negative, but this reflects a situation of the "past".

Attention should not be focussed in the "rear-view mirror", as the country is already living another reality, said Mantega, pointing out the "clear signs of growth of the economy".

He recognized, however, that, for the time being, the performance of productive activity is still weak and more focused on civil construction and on the sectors that received tax breaks, like, for example, the auto industry, through lower Industrialized Product Tax (IPI) on sales of new vehicles.

Mantega said that this incentive, scheduled to remain up to the end of the month, should not be renewed. Both this measure and the benefits granted to the so-called white line sector (cookers and fridges, for example) were "temporary resources to grant the economy time to recover. As the economy shows signs that it is moving on its own accord, we can remove this stimulus."

The minister made these statements after participating in the 5th Globo News Forum, which focussed on the crisis. At the meeting, Mangega said that interbank credit is coming back to normal and that the government hopes for a favourable reaction in the domestic market.

To him, starting in the second half, Brazil should have overcome the credit and foreign financing difficulties. He bets on a "recomposing of foreign markets, as some countries should be growing more and buying more Brazilian products."

Mantega also said that today, a provisory measure should be published with the regulations of the Credit Guarantee Fund for Small and Medium Companies. Through this fund, the government should make available around 1 billion Brazilian reais (US$ 500 million) in lines to be obtained at the Brazilian Development Bank (BNDES) and another 4 billion reais (US$ 2 billion) at the Bank of Brazil.

According to the minister, this means that loans may rise as high as eight times this value, or 32 billion reais (US$ 16 billion), as the volume made available is there just to cover possible default. He observed that, in the case of the fund established for the naval industry aimed at supplying Petrobras offers, the funds reached 5 billion reais (US$ 2.5 billion).

During a presentation at the meeting, the minister said that the great challenge to be faced should be the reduction of banking spread (the difference between the rate for collection by financial institutions and the rate charged on loans). Whereas a real interest rate of 5% is practiced, "people borrowing from banks are paying 28%, 30% and up to 40%." He recalled that the government plans to continue stimulating competition through public banks.

In an answer to economist José Roberto Mendonça de Barros, who criticised higher public spending, Mantega said that the government's greater spending was fundamental to alleviate the effects of the international financial crisis and mentioned, for example, the investment of 160 billion reais (US$ 80 billion) by the BNDES.

ABr

The median estimate from the one hundred economists was a contraction of 0.19% this year, down from zero growth a week ago. This coincides with reports from banks such as Morgan Stanley, Deutsche Bank AG and BNP Paribas which also forecast that Latinamerica's largest economy (1.5 trillion US dollars) will shrink this year.

Brazilian industrial production and demand weakened in the first three months of the year after a record contraction in the last quarter of 2008 as the full impact of the world's largest recession since World War II reached the shores of Mercosur main economy.

Brazil's gross domestic product will shrink 4.5% in 2009, Morgan Stanley said in a March 16 research report. BNP Paribas on March 10 forecast Brazil's GDP would shrink 1.5% this year, while Deutsche Bank forecasts a 1% contraction.

In a bid to counter recession, the Central Bank is expected to lower the benchmark interest rate Selic to a record low 9.25% by year- end. On March 11 the bank cut the overnight rate by 1.5 percentage points, the biggest reduction in five years, to 11.25% percent, matching the record low in place from September 2007 through April 2008.

Falling demand has helped rein in consumer prices. Analysts expect consumer prices to rise 4.26% in 2009, less than the midpoint of Brazil's inflation target, according to the median forecast in the central bank survey.

The central bank on March 30 indicated that lower interest rates coupled with rising household income may spark a rebound by year-end. "Recent results show a relative recovery, in the margin of the Brazilian economy," the bank said.

Central bank President Henrique Meirelles on March 25 said that the Brazilian economy should beat forecasts that policy makers view as "pessimistic."

The bank's policy makers said income gains were sustaining retail sales while revising their 2009 GDP forecast to 1.2%, down from a forecast of 3.2% made in December.

Mercopress