Sun, Jul 18, 2004 - Page 11 News List

Brazilians pack the streets to protest stymied economy

AP , SAO PAULO, BRAZIL

Thousands of Brazilians took to the streets Friday in cities across the country, protesting high unemployment and interest rates despite recent signs that South America's biggest economy is turning around after its worst recession in a decade.

Several thousand people marched kilometers down Avenida Paulista in Sao Paulo, the Wall Street of Brazil's financial and industrial heart, in the biggest show of force by union members, unemployed workers and landless peasants.

Demonstrators trying to pressure President Luiz Inacio Lula da Silva to keep his promises of job creation and redistribution of wealth also protested in Rio de Janeiro, the capital of Brasilia and other major cities in Latin America's largest nation.

"It's tough to live in a country that's so big and rich in resources without hope," said Cesar Manuel Silva, a 65-year-old laborer who hasn't had regular work in five years. "We need big changes because we're all sons of God, but we don't have enough money for bread."

Friday's protests came as the government reported industrial job growth in May for the first time in more than a year. That came on top of recent reports showing strong increases in industrial output and first-quarter economic growth of 2.7 percent.

But protesters said the pace of the recovery is too slow. Most said they still support Silva, a former metalworker's union leader who became Brazil's first elected leftist leader.

But they are disappointed his administration opted for a conservative fiscal policy aimed at reigning in inflation and prompting slow, sustainable growth for the first time in the country's history.

"I voted for him, but I was expecting a quicker recovery," said Creusa Pereira Goncalves, a 44-year-old unemployed auto worker who brought her 12-year-old son to the protest to carry a flag demanding more jobs. "It's better to have jobs with high inflation than no jobs."

Brazil's economy shrank 0.2 percent and unemployment shot up to over 13 percent after Silva took office last year and his administration imposed a series of interest hikes to control inflation.

The economy is expected to grow between 3 percent and 4 percent this year, but unemployment still stands at 12 percent and is nearly 20 percent in Sao Paulo, the country's largest city.

After raising the benchmark Selic interest rate to a whopping 26 percent last year, Brazil's central bank has lowered it to 16 percent this year. But rates for business and consumer loans are much higher, which stifles growth.

Unions that organized Friday's protests are threatening to stage a general strike to paralyze the country if the Selic rate isn't lowered significantly over the summer, said Luiz Claudio Marcolino, president of a union representing 106,000 bank workers in Sao Paulo.

"Interest rates of seven or eight percent would be reasonable for Brazil," he said. "That sort of reduction would prompt the economy to grow. How can it when you have to pay 100 percent interest to buy a refrigerator?"

In Brasilia, protestors marched to the Finance Ministry and burned an American flag emblazoned with the initials of the International Monetary Fund.

Under the guidance of Finance Minister Antonio Palocci, Brazil in November signed an extension of its US$34 billion IMF loan. American and IMF officials have praised Palocci and Silva's administration for sticking to a loan requirement for Brazil to post an annual budget surplus before interest payments of 4.25 percent of GDP through 2007.

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