Brazil’s gross domestic product expanded 1.9% in the second quarter compared with the first quarter this year, the Brazilian Census Bureau, or IBGE, said Friday. That was higher than the 1.64% advance estimated by 18 economists polled by Dow Jones Newswires.

The second-quarter growth ended the Brazilian economy’s streak of two consecutive quarters of shrinking GDP, the technical definition of a recession. The quick turnaround was the result of an aggressive monetary easing cycle, hikes to government spending and tax cuts on consumer goods.

Brazil’s manufacturing sector led the economic recovery, advancing 2.1% from the first quarter, the IBGE said. The service sector expanded 1.2%, while slack global demand for commodities undercut the agricultural sector. Agriculture output slipped 0.1% in the second quarter versus the first quarter.

The sum of Brazil’s economic output was valued at 756.2 billion Brazilian reais ($415 billion), the IBGE noted.

Year-on-year figures, however, still showed the tough road ahead for Brazil’s economy to regain the heated growth of early 2008. Brazil’s GDP decreased 1.2% in the second quarter versus the second quarter of 2008, the IBGE said.

That was better than the median estimate of a 1.44% year-on-year decline in the second quarter made by analysts.

Quick action against the financial crisis and ensuing global economic slowdown helped limit damage to Brazil’s economy. The Central Bank of Brazil embarked on a rate-cutting cycle in January that brought the benchmark Selic base interest rate to the reference rate’s lowest-ever level of 8.75%.

In addition, the government adopted tax breaks for car sales and big-ticket appliances such as refrigerators and washing machines in order to stoke domestic demand.

The moves worked as consumers’ access to credit jumped and confidence returned. The IBGE data showed that family consumer spending rose 2.1% in the second quarter compared with the first quarter. Government consumption, however, edged downward 0.1% quarter-on-quarter.

Central bankers have indicated that the easing cycle is over for now as the effect of the rate cuts works its way through the broader economy.

In minutes from the central bank’s September meeting released Thursday, the bank emphasized prospects for “a gradual recovery” by the nation’s economy while giving equal time to “mitigating the risk of resurgent inflation.”

Inflation data, however, continued to show easing price pressures. That should allow interest rates to remain at current lows through the rest of the year, economists said.

Brazil’s consumer price index was at 4.36% in the 12 months through August. That’s well below the government’s year-end target of 4.5%, and economists expect the rate to continue drifting downward through the second half of 2009.

The IBGE also offered some revisions to the quarter-on-quarter GDP figures. First-quarter GDP was revised downward to a decline of 1.0% from the fourth quarter 2008, down from the previously reported slide of 0.8%.

The fourth quarter was revised upward to a decrease of 3.4% compared with the third quarter versus the previously released 3.6% tumble. The third quarter 2008 was revised downward to growth of 1.3% compared with the second quarter versus growth of 1.4%.

In addition, second quarter 2008 GDP figures were revised downward to growth of 1.5% from the first quarter 2008 from previous growth of 1.6%.

Brazil’s official statement, pronounced in the gathering of finance ministers and CB presidents from the world’s 20 top economies in London, defended that emerging nations should play a significantly larger role in economic decisions, “to reflect the changes in the world economy”.

Before the meeting started, Bric countries (Brazil, Russia, India and China)  proposed an agreement in which developed nations would give 7% of their share in IMF and 6% of the share they have of the World Bank. Once this was accepted, developing nations would together detain half of the global amount of shares.

Currently, rich countries have 60% of vote both in IMF and in the World Bank. The battle for vote power is the main topic on Brazil’s agenda for the third G-20 meeting in only ten months.

THE ECONOMIST – When David Neeleman returned to Brazil as a 19-year old Mormon missionary, he spent two years among shoeless children and their toothless parents in the country’s poor north-east. The experience turned him into “kind of an anarchist”, he says. His band of missionaries rented a house in Recife that was next to a slum and started trying to convert the people who lived there. Mr Neeleman reckons that he made about 100 converts—a number he does not consider particularly impressive.

This was a different country from the Brazil that Mr Neeleman knew from his childhood. He was born in São Paulo to parents who were also Mormon missionaries. He spent several years living the life of a well-to-do Brazilian child in the country’s south-east, which typically revolves around beaches, barbecues and private sports clubs.

Many Brazilians lament the contrast between these two worlds. But it is less marked now than it was in Mr Neeleman’s childhood thanks to a recent spell of growth that has favoured the poor in particular. In that he sees an opportunity. Brazil’s middle class is swelling: at the last count there were 97m people in marketing bracket “C”, which means they are rich enough to contemplate getting on an aeroplane. Mr Neeleman, in turn, has some experience getting people onto planes, having founded JetBlue, an American airline that aims to combine low cost with relatively lavish service.

Mr Neeleman insists that he was “pretty much done with the airline business” last year, when he resigned as chairman of JetBlue, which he had taken from an idea to an IPO and is now valued at $1.6 billion. The previous year he had ceased to be chief executive after blunders had left angry passengers stranded during a spell of bad weather. Mr Neeleman says he was “humiliated and mortified” by it all. That episode followed an earlier embarrassment, when JetBlue had handed over the names of its customers to a military contractor looking for terrorists.

When he tried to put all this behind him by returning to Brazil, he found air fares that were 70% higher than in America in a country that is considerably poorer, a market in which the two biggest carriers, TAM and Gol, had a combined share of 85% and large areas of the country that were scantily served by airlines. All this tempted him back into a business that in the words of Sir Richard Branson, British founder of the Virgin family of carriers, excels at turning billionaires into millionaires.

Making air travel more accessible in a country the size of the continental United States, where infrastructure is rickety and many families have been scattered by internal migration, is a noble aim—and potentially a lucrative one. “It sometimes feels like this country is built for 20m people,” says Mr Neeleman, when in fact it has close to 190m souls. His Brazilian airline Azul (which means blue) was born in December last year. On some routes, its tickets are cheaper than a bus fare for the same journey.

In nine months the company has gone from having no employees to a staff of 1,300. It has 12 planes made by Embraer, a local firm, which pleases the Brazilian government; it will have 14 by the end of the year. Azul is already the country’s third-biggest carrier, although it is still a long way behind the big two.

The speed with which Mr Neeleman has got his new company airborne is perhaps surprising given Brazil’s reputation as a bureaucratic place where life is hard for entrepreneurs. In its “Doing Business” survey, the World Bank ranks Brazil 121 places lower than America on ease of starting a business. According to Mr Neeleman, lots of things that companies need, from capital to telephone lines and computing expertise, are indeed more expensive in Brazil than in America. Labour is not much cheaper when taxes are taken into account. The corporate tax rate is lower than in America but Azul needs an army of accountants to pay it correctly. Customers have less access to credit than American ones do, so Azul has had to perform some of the services of a bank, offering interest-free credit for ten months, and so on.

But the feebler competition and growing market compensate for this. “America has an excess of everything: cars, credit,” says Mr Neeleman. “Down here people are getting their first car, first credit card, owning their first home. It feels like the beginning of the cycle.”

Mr Neeleman is also lucky that Brazil’s aviation infrastructure may soon improve. The country has lots of airports, which were built enthusiastically by the military regime that ruled the country from 1964 to 1985. But many of them are in disrepair and the state company in charge of them, Infraero, has been poorly run. A low point came in 2007 when a TAM plane skidded off the end of a runway in São Paulo, killing 199 people. But the government has put new managers in place at Infraero and plans to renovate Brazil’s airports before the country hosts the World Cup in 2014.

The gospel of prosperity

Mr Neeleman and his wife recently returned to the church where he was a missionary in Recife. One generation later, he says, there was a car park full of new vehicles, and a beautiful chapel. When he gets a break from his nine children and his corporate offspring, Mr Neeleman devotes a lot of time to the Mormon church’s charity work, which aims to foster economic development as well as the spiritual sort. But it will probably be his role as an evangelist of commerce that brings the most benefit to Brazil.

On a recent Monday at São Paulo’s international airport, a group of some 30 young American Mormons in dark suits with lapel badges bearing their names were waiting to clear immigration and begin proselytising. No doubt many of them were already looking forward to returning home. But perhaps a few will form an enduring attachment to a country that resembles America in so many ways, and will use their experience of converting the natives to start a business in Brazil too.

Foreign investors have both eyes on Brazil’s promising market

The great potential of the Brazilian consumer market has become a major target for foreign investment. Between this year’s January and May, foreigners have invested more than US$ 11.2 billion in industry, commerce, agriculture and service in general – the second biggest investment amount of the decade.

In interview to the Brazilian newspaper O Estado de S. Paulo, the president of the Brazilian Society for Transnational Companies and Economic Globalization (Sobeet), Luís Afonso Lima, highlighted that the quantity of resources in this year’s first five months was the same as the total volume that entered the country during the first five months of 1999, when a series of  privatizations attracted great amounts of foreign capital.

According to a research conducted by the  Brazilian Central Bank, the perspective for 2009 is that IED (Direct Foreign Investments) reach US$ 25 billion, still below 2008′s US$ 45 billion record. However, if the perspective for this year is confirmed, the amount of foreign investment will be the 6^th ever measured by CB, since 1947.

In the beginning of the year, there was a strategic cut on foreign investment. Multinational companies had to send capital to their headquarters, which were in a tough situation due to the economic crisis. Now that phase is over, and companies have resumed their investments in Brazil with both eyes on its consumer market. “Multinationals are looking for long-term, for profitability is getting smaller in developed markets”, states Lima.

Launched two weeks ago, a 104-unit residential project directed at middle-income families in Sao Paulo’s Vila Carrao area is the best example of that, Thomas Shapiro, president of GoldenTree InSite Partners, said at the Reuters Global Real Estate Summit. “We sold every unit in four hours,” Shapiro said, adding that the company has recently raised around $500 million to invest there.

When crises arrive, Brazilians traditionally prefer to invest in hard assets

Brazil has kept a low profile internationally in the past few months, he added. That was good for his company to identify good investment opportunities, as local listed real estate companies like Cyrella and Gafisa were suffering with the stock market debacle.

Shapiro said the fundamentals of the Brazilian economy looked better than expected for the year ahead and a stimulus package from the government has helped the real estate market heat up.

He also stated that the upper class in Brazil traditionally prefers to invest in hard assets when crises arrive, but discarded signs of a real estate bubble forming in the South American country, like the one that hit countries like the U.S. and Spain.

High demand in Sao Paulo

Due to a lack of available buildings, it is getting harder to find an apartment or a house to rent in Sao Paulo. In many areas of the city, the number of people searching for a home has more than doubled in some real estate agencies. For low-priced buildings, the waiting time can last four months.

The most sought properties of Sao Paulo have one and two bedrooms, with monthly rent between 1,000 and 1,600 reais – but the increasing demand makes rent prices constantly higher. According a research of the Habitation Syndicate of Sao Paulo (Secovi-SP), rent prices in the city rose around 11,1% between last June and this year’s May.

After a major downturn, consumer confidence in Brazil increased a lot in June

The ICC is divided in two indexes: Current Situation Index (ISA), 5.3 percent higher this month, and Expectations Index (IE), which established a 4.4 percent high in June. The percentage of consumers who evaluated the current economic situation as “good” rose almost 2 percent compared with May, and the number of people who judge it as “negative” was reduced from 46.1 to 40.3 percent.

However, the greatest contribution to ICC results this month came from the IE index, which measures economical expectations for the next six months. Between May and June, the proportion of consumers who predicted improvement in the near future rose from 28.3 percent to 30.9 percent.

The Consumer Expectations Poll is conducted based on a sample of more than two thousand residences in seven of the Brazilian capitals. This month’s data collection was made between May 29th and June 19th.