Aug 30- Despite better-than-expected economic growth in the second quarter, Brazil's economy still faces major headwinds. Bobbi Rebell reports.
Brazilians getting a temporary break from their economic pain. New data shows the economy grew 1.5 percent at its fastest pace in more than three years last quarter- and their finance minister says it's headed to 4 percent by next year. But the growth came from investments and industry- not consumers. And Brazilians - facing higher interest rates, a depreciated currency, and rising inflation- remain frustrated SOUNDBITE: ELIANE GOMES, FOOD CART OWNER (PORTUGUESE WITH ENGLISH TRANSLATION) SAYING: "For one year things keep going up. The more time that passes the worse things are getting. SOUNDBITE: JOSI MOREIRA, LAWYER (PORTUGUESE WITH ENGLISH TRANSLATION) SAYING: "I love to buy shoes and clothes but I stopped now, because really everything is more expensive. Food I can't stop buying because it the most important thing for all of us. That food is getting more and more expensive- says retiree Antonio De Souza: SOUNDBITE: ANTONIO DE SOUZA, RETIREE (PORTUGUESE WITH ENGLISH TRANSLATION) SAYING: "You are buying the same quantity at a higher price. You take two kilos of beans, but these two kilos two years ago cost four reais, five reais, and today they cost 14, 15 reais depending on what kind. So you are taking the same thing but at a much higher price." Thursday, Brazil's central bank raised its benchmark interest rate half a percentage point to 9 percent- continuing its tightening plan to rebuild confidence in the economy- and fight inflation- even as it copes with a depreciated real. Economist Gilberto Braga: SOUNDBITE: GILBERTO BRAGA, BRAZILIAN ECONOMIST (PORTUGUESE WITH ENGLISH TRANSLATION) SAYING: "Every time the dollar goes up it negatively affects the Brazilian economy that already has not had a very good year in 2013. In truth, a series of inputs and prime materials of Brazilian products are imported. Even if they are products made in Brazil, they count on parts and components bought outside (the country). The rise of the dollar makes the cost of production go up and pressures the country's internal inflation even more." And a government source tells Reuters that Brazil's stronger-than-expected economic growth will not change much in terms of their monetary policy plans- it's expected to hike rates by another half a percentage point in October.