Brazil Must Follow China Example, Invest in Infrastructure -Finance Minister

By Paulo Trevisani

BRASILIA--Brazil needs to follow China's example and invest in infrastructure for decades to come to lift growth over the long term, Guido Mantega, the country's finance minister, said Thursday during a Senate hearing.

Mr. Mantega said Brazil is already seeing signs of economic recovery after dismal growth in 2012, but still needs to invest in infrastructure to unleash potential growth.

"We need to follow China's example and invest in infrastructure," Mr. Mantega said during a routine visit to meet with members of the Senate economic affairs committee. The official reaffirmed his view that IPCA consumer price inflation this year should remain within the government's target range of between 2.5% to 6.5%.

Inflation has been rising steadily in recent months and currently stands at around 6.1% on a rolling 12-month basis, prompting concerns that inflation may end the year above the target range unless the central bank raises interest rates. On the other hand, higher rates could harm an economic recovery. In 2012, growth was a meager 0.9%.

To help the recovery, the government will cut the equivalent of 50 billion Brazilian reais ($25 billion) in taxes this year and BRL55 billion in 2014, the minister said.

"Brazil has had high taxes for years and it is now time to reduce them to stimulate de economy," he said.

The minister said that the global economy is in better shape than last year, but expressed concern about risks to global trade. He said he expects global trade to grow 4% this year.

Write to Paulo Trevisani at paulo.trevisani@wsj.com

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