This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS BRASILIA 000172 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR AND OPIC 
NSC FOR MIKE DEMPSEY 
DEPT OF TREASURY FOR FPARODI 
USDOC FOR 3134/USFCS/OIO/WH/EOLSON 
USDOC FOR 4332/ITA/MAC/WH/OLAC/MWARD 
 
E.O. 12958: N/A 
TAGS: ECON BR
SUBJECT:  BRAZIL: GREATEST (ECONOMIC) HITS OF 2004 
 
 
¶1.  Economically speaking, Brazil had an outstanding year in 
2004, with the country by all accounts poised to embark upon 
a path of continued, sustainable growth.  Below we have set 
forth a short list of the year's "greatest hits."  While 
there is more that the GOB needs to do sustain such growth 
levels - including, for instance, improving the investment 
and regulatory climate - to date, the GOB economic team has 
put together an impressive string of achievements. 
 
¶2.  Begin List. 
 
-- GDP expanded at a rate of 5 percent, the best result 
since 1994. 
 
-- Brazil is closing in on Mexico as the Latin American 
country with the highest GDP (in dollar terms).  According 
to some private sector estimates, by the end of 2005 
Brazilian GDP should stand reach US$634 billion - only $57 
billion behind Mexico. 
 
--  Between Dec. 2003/Nov. 2004, industrial production 
surged 8.1 percent, the biggest increase since 1986. 
 
--  Consumer price inflation (IPCA index) dropped to 7.6 
percent, down from 9.3 percent in 2003. 
 
--  The Brazilian economy generated 1.52 million formal 
sector jobs in 2004, the highest total since the GOB 
initiated this data series (in 1992). 
 
--  2004 saw a current account surplus of US$11.3 billion 
and a record trade surplus of US$33.6 billion. 
 
--  To the delight of international markets, the GOB raised 
its primary surplus target (net revenues minus 
expenditure/GDP) from 4.25 percent to 4.5 percent.  With a 
final primary surplus of 4.6 percent, Brazil not only met - 
but exceeded - its revised target. 
 
--  Net debt to GDP ratio declined from 57.2 percent to 52 
percent, coming tantalizingly close to dropping below the 50 
percent level - a sine qua non if Brazil is to acquire 
investment grade status for its sovereign debt. 
 
--  Moody's raised its outlook on Brazilian sovereign 
external debt from stable to positive. 
 
--  The Lula administration garnered congressional approval 
of three of its key micro-reforms:  a new bankruptcy law, a 
public-private partnership regime, and a judicial 
streamlining package. 
 
--  Brazil is now the world's largest producer and exporter 
of coffee, orange juice, iron ore and sugar; world's second 
largest producer - and first largest exporter -- of 
soybeans, beef, and chicken.  Industrial production has kept 
pace: Brazil is the world's fourth largest aircraft maker; 
the world's eighth largest steel and software producer; and 
world's eighth largest cell phone market. 
 
--  Exports in 2004 reached an all-time record at US$ 96 
billion, substantially over the GOB's original target of US$ 
73 billion. 
 
--  In 2004, 865 new Brazilian companies - primarily small 
and medium-sized enterprises, entered the export market. 
 
--  Exports from Brazil's metals industry surged 41 percent 
as the country enjoyed a record year for sales abroad. 
 
--  Power generation capacity expected to increase by 4,472 
MW in 2005 as 15 new hydro-electric plants will start 
commercial operations. 
 
End List. 
 
Danilovich