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Brazil: another chip in the BRICS

Thursday, June 14, 2012 - 02:31

June 14 - Brazil, which helped keep the global economy stay afloat during a time of weak growth in the developed world, is the latest example of the so-called BRICS countries to indicate these emerging economies may not be able to come to the rescue for much longer. Conway G. Gittens reports.

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The Brazilian government wants to ensure there is enough capital to keep on building for the 2014 Soccer World Cup, 2016 Summer Olympics, and beyond. On Thursday, officials dropped a tax on longer-term foreign lending, hoping to convince Brazilian companies to get loans and keep building, in an effort to get around Europe's debt crisis and get the once-red hot economy back to form. Economic analyst Andre Perfeito says Brazil has to find a way to get the money stampeding out of Europe back to Rio. SOUNDBITE: ANDRE PERFEITO, ECONOMIC ANALYST (PORTUGUESE WITH ENGLISH TRANSLATION) SAYING: "Brazil needs heavy investments because it has structural problems, and abroad, what you have, is a lot of capital but few investment opportunities. If Brazil manages to attract this capital, it would be a good deal for everyone including Brazil." Brazil's economy, which stayed firm during softness in the developed world, is showing signs the BRICS (Brazil, Russia, India, China and South Africa) may not be strong enough to keep building a wall around the slowing global economy. South America's largest economy barely grew between the end of 2011 and the beginning of 2012. Agricultural exports are taking a hit as growth slows in major partner China; and Europe, another top destination for Brazil's goods, struggles with the debt crisis. Another cause: a hangover from the boom years, resulting in an underqualified, overpaid workforce that has left employers with little reason to dance in the streets. Brazil's finance minister Guido Mantega says he's working to restore that confidence. SOUNDBITE: BRAZIL FINANCE MINISTER GUIDO MANTEGA (PORTUGUESE WITH ENGLISH TRANSLATION) SAYING: "We have data indicating that Brazil's economy will start to heat up again in the second semester. It (economy) will feed from the results of the several measures promoted by the government since last year, including a more flexible monetary policy, lower interest rates, lower taxes and several other stimulus measures." STAND-UP: CONWAY G. GITTENS, REUTERS REPORTER (ENGLISH) SAYING: There's some progress. Retail sales picked up pace in April, although not as much as hoped. But more recent data from purchasing managers suggest a contraction is underway, leading experts in the U.S. and Brazil to expect more rate cuts in July and August. Conway Gittens, Reuters