Productivity to maintain growth

Brazil's economy can maintain sustainable growth and controlled inflation through growing investment and productivity, Brazilian Finance Minister Guido Mantega said Tuesday.

Mantega said that contrary to the forecasts of many market analysts, there was little danger that increased domestic demand would provoke increased inflation.

"Real wages can grow without inflation as long as productivity is equal to or greater than the growth in wages, and this is what is happening," he said, during a presentation at a meeting of the government's council for social and economic development.

Mantega noted that with the aid of incoming investment, productivity in Brazil property has been growing at a rate of 4%.

He said that the inflation that has occurred recently in the local economy due to external factors such as increased raw material prices and higher costs of food products.

"Our situation is comfortable," he said. "We must not fear that there is an increase in inflation."

Brazil government set annual targets for the IPCA consumer price index inflation at 4.5%.

According to the central bank market survey released this week, IPCA inflation seen the end of 2008, 4.5%, and slowing to 4.3% in 2009.

Mantega said the credit crisis in the United States was "significant". He affirmed that Brazil's economy remains in a position to grow at a rate of more than 5% a year. Brazil's property economy grew by 5.4% in 2007, according to the country IBGE statistics institute.

Mantega on Tuesday said that the government is focusing its efforts on correcting the policy of "small deviation" in the country's balance of payments as a result of rapid growth and investment.

Last month, the government announced measures to strong inflows of portfolio investments in the country's high-yielding fixed-income securities as a way to limit the value of the local currency, the real. Brazil property, the positive trade balance has declined in the last year, along with the 17% appreciation of the currency.