Brazil investment bounceback seen in 2009-official

Thu Jun 18, 2009 12:52pm EDT
SAO PAULO, June 18 (Reuters) - Corporate investment and factory usage in Brazil will bounce back in the fourth quarter of 2009, should growth in household consumption remain steady, the head of the state development bank BNDES said on Thursday.
Factory capacity, which tumbled about 10 percentage points to 74 percent this year since the intensification of the global credit crisis in September, will rise back to near 82 percent by year-end, BNDES President Luciano Coutinho told an event in Sao Paulo.
"Continued consumption will stimulate the bounceback of private investment in the last quarter," Coutinho said.
Coutinho's comments signal the government's optimism that domestic consumption and government spending will help cushion the impact of the global economic downturn, putting the country on track to emerge from recession sooner than major economies.
Household consumption, which has driven Brazil's economic boom since 2004, firmed 0.7 percent in the first quarter, while government spending expanded 0.6 percent in the same period.
Coutinho predicted that, if the recovery takes hold firmly, investment may grow to 19 percent of gross domestic product this year from 16.6 percent of GDP in the first quarter.
Earlier on Thursday, Finance Minister Guido Mantega said the economy will return to growth soon and expand about 1 percent this year and 4 percent in 2010.
Brazil's GDP contracted 0.8 percent in the first quarter of 2009 from the previous quarter BRGDP=ECI.
A dearth of credit and uncertainty over the extent and duration of the slowdown in the developed world has led many Brazilian companies to pare investment.
Capital spending sank 12.6 percent in the first quarter, the worst decline since the IBGE's data series began in 1996. The plunge added to a 9.8 percent drop in spending in the fourth quarter of 2008.
Increased risk-taking and easier credit will fan activity in domestic capital markets and help fuel investment, Coutinho said. (Reporting by Aluisio Alves; Writing by Guillermo Parra-Bernal; Editing by James Dalgleish)