Rousseff: Brazil to shun EU's austerity path

Brazil will not adopt EU-style austerity measures to tackle its economic crisis and will instead cut taxes and maintain social programs, President Dilma Rousseff said Friday. Inaugurating an oil platform in the northeastern state of Bahia, she leveled fresh criticism of the belt-tightening measures adopted by debt-ridden European countries, including salary cuts and higher taxes. "Brazil is following a different path. This is not our way. Our way is to maintain our investments, seek each time to ensure that the subsidies, the advantages and the successes of this development are distributed," she noted. She made clear that resource-rich Brazil, the world's sixth largest economy, will not restrict any labor rights, will boost stimulus measures and will act to prevent the national currency, the real, from appreciating against the dollar as this would harm the already fragile industrial sector. She pointed to the central bank's decision to cut its base rate from 12.5 percent last August to a historic low of eight percent this week. Bank authorities hope their gradual rate cuts will reduce the cost of credit for consumers. "We will stick to this target: tax cuts. Gradually we will turn the crisis into an opportunity," Rousseff said. She added that her government wanted to reduce production costs "in a systematic way, through tax cuts and "not as is being done there (in Europe) by cutting salaries and social gains." Brazil is currently experiencing anemic growth which authorities blame on the impact of the eurozone debt crisis, the economic slowdown in China and the lackluster performance of the US economy. Last year, the South American giant grew a paltry 2.7 percent last year, down from a sizzling 7.5 percent in 2010. And the central bank has slashed its official GDP forecast for this year to 2.5 percent from 3.5 percent, while market analysts are projecting growth of around two percent. The Brazilian government is hoping that its recent measures to boost industry and consumption will spark a rebound in the second half of this year, but the pace is likely to be slower than initially anticipated.