Auto industry to invest $5 bln in Brazil in 2008

Thu Mar 27, 2008 7:00pm EDT
SAO PAULO, March 27 (Reuters) - The automobile industry will invest $5 billion in 2008 in capacity expansion in Brazil to keep up with growth in domestic demand, the president of Brazil's automakers association Anfavea said.
Anfavea President Jackson Schneider outlined the investment forecast late on Thursday in a meeting with Brazil's finance minister, Guido Mantega. Production capacity should rise from the current 3.5 million units to 3.8 million units in 2008.
He added that automakers and the associated parts industry will invest $20 billion through 2010.
Mantega has been concerned with Brazil's industrial capacity investments in the face of an expanding credit market and growing domestic demand. Inflation was relatively calm at around 4.5 percent in 2007 but has shown signs of accelerating in 2008.
The minister repeated a previously stated forecast that Brazil's economy would likely grow between 5 percent and 5.5 percent through 2010 and said he was satisfied with the level of investment in the sector.
Brazil's central bank earlier on Thursday raised its forecast for inflation in 2008 above its target and cautioned it may have to raise interest rates to cool consumer demand, which has pressured prices. [ID:nN27196261]
(Reporting by Aluisio Alves; Writing by Reese Ewing; editing by Gunna Dickson)