brazils banking bounces back prompting economic optimism
News Posted On: 25 August 2009
The President of Brazil's central bank Henrique Meirelles has said that the credit landscape in the country has normalised, and that this has made Latin America's largest economy well placed to emerge from recession more quickly than other's in the region.
"The concession of credit in Brazil is already back to the levels before the crisis," Meirelles said at a Brazilian- American Chamber of Commerce event in New York.
Meirelles also said that forecasts on the future of the Brazilian economy are improving week by week, according to central bank surveys.
The central bank published a survey earlier this week which forecast a 0.3% contraction in Brazil's economy this year. Meirelles said the number may turn "slightly positive" by the end of the year. The central bank forecasts a 0.8 percent expansion.
This is in stark contrast to the International Monetary Fund, which is still forecasting a 1.3% contraction in Brazil's economy this year.
However, the IMF's forecasts have been looking increasingly out of date as the global economic reality has begun to change shape rather rapidly in the last week.
We have been talking about it for a few days now, and think that an adjustment will be made shortly to many of the IMF's forecasts -- especially their 2010 forecasts; we would expect Brazil to bounce back next year with a much stronger growth than 2.5%.
The central bank's statements come after it was revealed that outstanding bank loans rose 1.3 percent in June to a record 1.28 trillion reais ($710 billion). This was the largest growth for six months and is thought to have been at least partly because the benchmark lending rate has been cut five times this year, according to data compiled by the central bank.
Meirelles said the steps the country took during the outset of the crisis, including the sale of dollars to shore up the currency, also paved the way for a quick recovery.
"We had conditions to react forcefully, decisively and quickly," he said.
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