- The Washington Times - Sunday, March 21, 2004

SAO PAULO, Brazil (AP) — Brazil’s recession-battered economy is virtually certain to enjoy a modest expansion this year, but that may not be sufficient to attain the government’s dream of sustained growth and full employment, said business groups and financial analysts.

“The government’s target of 3.5 percent growth in gross domestic product this year is assured,” said Sao Paulo business consultant James Mohr-Bell. “In fact, it will be quite easy to attain: Consumers are in a buying mood and industries have plenty of unused capacity they can bring on stream to meet demand.”

Government and trade association reports last week tended to buttress Mr. Mohr-Bell’s argument.

The Brazilian Census Bureau said retail sales in January rose 6 percent over the same month a year ago, the biggest jump in three years.

Meanwhile, the National Industrial Confederation said manufacturers created some 300,000 jobs during the first two months of the year .

Growth has been the mantra of Brazil’s leftist Workers’ Party administration since President Luiz Inacio Lula da Silva took office in January 2003.

In its first year in office, however, the government had to withstand a rising unemployment rate, which still hovers around 13 percent, and a full-blown recession. Brazil’s GDP shrank last year by 0.2 percent.

The administration won important economic policy victories last week when the Chamber of Deputies passed bills to streamline welfare and import tax collections and to apply modern accounting techniques to public works projects.

A key Senate committee, meanwhile, approved a bill to modernize the nation’s court system.

“Bringing idle factories on stream again could fuel expansion through 2005,” said Mr. Mohr-Bell. “But that’s the easy part. To get sustained growth, starting in 2006, Brazil needs investment.”

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