Why Brazil is weathering the global financial crisis this time
President Luiz Ignácio Lula da Silva met with French President Nicolas Sarkozy in Paris Wednesday before heading to the G-20 summit in Britain.
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The outlook for the automakers has brightened, however, at least in the short term after President Lula in January exempted most new cars from the 7 percent sales tax for three months. The exemption was extended this week for another three months.Skip to next paragraph
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Sales rose in February to 199,000 – up 22,000 from November but still 70,000 below September.
"When it comes to sales, I'm nervous," Rogelio Golfarb, the director of corporate affairs and communication for Ford in Brazil, said at the company's sprawling industrial complex on the outskirts of São Paulo. "The buyer has to be sure he'll be able to pay."
Ford has reduced production, which has been felt by assembly-line workers such as Eneias Camargo.
Standing next to half-built cars minutes after his shift ended, Mr. Camargo said the loss of overtime income means he can't trade in his 2006 Ford for a new model.
"I've also stopped studying English," said Camargo, who's worked for 20 years at Ford.
Sergio Nobre, the president of the Metalurgical Workers Union, said that Lula promised him in January that he would continue government programs to benefit the carmakers, as long as they agreed to not lay off any more workers.
"The government's role is decisive in leading to a recovery of the auto industry," said Mr. Nobre, who sat in the same dingy office in suburban Sao Paulo that Lula used to occupy. Lula, a onetime autoworker who became the union's leader before creating the national Workers Party, held the job 30 years ago.
The government's help is cheering several industries.
Antonio de Sousa, president of the Sao Paulo construction-workers union, said he expects the government spending spree on infrastructure projects to create 150,000 jobs in 2009.
Similarly, Petrobras, the energy giant partly owned by the government, is moving ahead with plans to invest billions of dollars to find and produce more oil.
Atento, which owns call centers throughout Brazil, is hiring workers. So is Pao de Acucar, a ubiquitous coffee shop.
In Rio, on a warm morning where most shoppers wore shorts and T-shirts, Antonio Abrahao lamented that sales have declined by 15 percent in his neighborhood market.
"I expect a difficult year," said Mr. Abrahao, taking a break from ringing up sales. "But now we have savings. Our economy is more solid. We're not in crisis this time."
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