BRASILIA, Dec 1 (Reuters) – Brazil moved aggressively to shield its economy from the euro-zone debt crisis on Thursday, taking a flurry of measures to boost consumption and investment in Latin America’s biggest country.
The measures, which include tax cuts for foreign investors and domestic manufacturers, were unveiled one day after Brazil’s central bank slashed interest rates for the third straight time to shore up credit, citing concerns about the financial turmoil emanating from Europe.
Brazilian markets rallied with the Bovespa stock index surging as much as 2.5 percent and the currency more than 1 percent. Shares in exchange operator BM&FBovespa jumped nearly 9 percent and retail stocks gained.
With the economy already feeling the effects of a global credit crunch, Finance Minister Guido Mantega reiterated Brazil’s willingness to do its part in European rescue efforts by offering an unspecified amount of additional funds for the International Monetary Fund.
The government of President Dilma Rousseff is seeking to prevent the turmoil from derailing Brazil’s boom, which has lifted more than 25 million people out of poverty in the last decade and made the country one of the world’s hottest investment destinations.
“We won’t allow the global crisis to contaminate the Brazilian economy,” Mantega said, adding that the measures aim to ensure that Brazil’s economy starts 2012 on the upswing and grows 5 percent next year.
The measures underscore the pragmatic style of the Rousseff administration, which has proven willing to abruptly change policy direction as economic conditions shift. Early this year, Brazil clamped down on credit and foreign capital inflows to prevent the economy from overheating. Now it is unwinding those restrictions in the face of chilling headwinds from abroad.
