Brazil mulls new stimulus to boost economy – Braskem

14 August 2012 21:38  [Source: ICIS news]

HOUSTON (ICIS)--The Brazilian government is considering several proposals to boost its economy, Braskem said on Tuesday.

The Brazilian economy is expected to grow by just 2.5% this year, Braskem said.

In 2010, Brazil's economy grew by 7.5% before slowing down to 2.7% in 2011, according to the International Monetary Fund (IMF).

The slowdown was one of the reasons why Braskem reported a second-quarter net loss of reais (R) 1.03bn ($510m, €413m).

Recently, Brazilian lawmakers have proposed several new stimulus programmes.

In July, the Brazilian House of Representatives approved a provisional measure that would reduce payroll charges paid by Brazilian manufacturers in certain sectors, Braskem said.

Another proposal would transfer R45bn from the treasury to the Banco Nacional de Desenvolvimento Economico e Social (BNDES), Brazil's development bank. The money would finance industrial investments at low interest rates.

Both proposals are in the Senate, and they could go into effect by the second half of the year, Braskem said.

Meanwhile, the development bank as well as government, union and industry representatives have created the Chemical Industry Competitiveness Council, which concluded its work in May, Braskem said.

For about a year, the group has prepared proposals that would lower taxes on feedstock and capital goods, with the intention of encouraging investment in new chemical capacity and the development of renewable chemicals, Braskem said.

Braskem estimates that the council's proposals could encourage companies to make R80bn in investments.

Looking forward, the upcoming 2014 FIFA World Cup tournament should provide a big boost to the Brazilian economy, Braskem said.

In fact, the IMF expects Brazil's GDP to grow by 4.1% in 2013.

($1 = R2.02)
($1 = €0.81)

By: Al Greenwood
+1 713 525 2645

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