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Brazil's economy may grow by 7.5% this year

Brazil’s Finance Minister, Guido Mantega, believes that the nation’s economy has the capacity to expand 7.5 percent this year.

Speaking to investors in New York on October 12, Mantega said Brazil is experiencing a sustainable expansion and that the conditions are in place for 5.5 percent to 6 percent growth in the next four years regardless of how the U.S. economy performs. “Brazil is enjoying high quality, sustainable growth, because it doesn’t generate macroeconomic imbalances,” Mantega said. “Investment today is growing almost three times faster than the economy and we’re increasing productivity.”

Whilst some economic commentators are expressing concerns about Brazil’s inflation, Mantega said he expects inflation of only 5 percent to 5.2 percent this year.

On the currency front, Mantega indicated that Brazil “doesn’t intend to allow” an excessive gain of the real and may “think of other steps” to stem investment inflows as a strong real may hurt Brazilian industry.

“We cannot allow abuses in foreign exchange markets, otherwise it will damage Brazilian industry,” Mantega said. “As developed countries take longer to recover, some are engaged in quantitative easing, pouring resources into emerging markets.” Mantega favours a “free-floating” exchange rate.

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