* Economy expands a paltry 0.2 pct in Q1 from previous
quarter
* Quarterly growth at 0.8 pct on a year-on-year basis
* Weak investment data bodes poorly for recovery
* Pressure mounts on Rousseff to take more dramatic steps
By Brian Winter and Silvio Cascione
SAO PAULO, June 1 (Reuters) – Brazil’s economy barely
expanded i n the first quarter a s frustrated business leaders cut
back on investments, se tting the stage for another disappointing
year and casting new doubt on the health of emerging markets.
The economy grew just 0.2 percent compared to the final
three months of 2011, l ess than half t he pace m arkets expected.
The third straight quarter of weakness in the world’s
sixth-largest economy prompted new calls for President Dilma
Rousseff to enact much bolder reforms that could reclaim
Brazil’s mantle as a favorite of global investors.
That reputation has faded since mid-2011 as Brazil failed to
cope adequately with the challenges posed by its boom over the
past decade. A combination of a clogged transport system, an
overvalued currency and an expensive and underqualified labor
force have raised the costs of doing business and have caused
companies to delay or cancel expansion plans.
The data released by the government on Friday showed that,
despite numerous stimulus packages enacted by Rousseff since
late last year, investment shrank in the first quarter. Some
business leaders say that much more dramatic steps – such as an
across-the-board simplification of Brazil’s byzantine tax code –
are necessary to unloc k a new era of fast growth.
Continued…
