UPDATE 1-Brazil govt prepares more measures to boost growth

Thu Nov 29, 2012 8:58am EST

* Trade minister says may extend payroll tax breaks to services

* Finance minister sees investment rebounding next year

* Inflation under control and will decline, Mantega says

SAO PAULO/BRASILIA, Nov 29 (Reuters) - The Brazilian government is studying more stimulus measures to stoke an economy in which third-quarter growth is expected to be "nothing spectacular," Finance Minister Guido Mantega said on Thursday.

The government is looking into widening payroll tax breaks to more areas of the economy, including the services sector, Trade Minister Fernando Pimentel told journalists separately.

In a newspaper interview published on Thursday, Mantega said the government also plans to extend a capital-goods financing program and launch investment programs for the port and airport sectors.

Mantega added that over time the payroll tax breaks would be extended to the economy as a whole, according to the interview published by Folha de S.Paulo.

Both comments come ahead of Brazil's official GDP data for the third quarter, to be published on Friday at 9 a.m. (1100 GMT).

A Reuters poll of economists forecast a 1.2 expansion in the third quarter from the previous one.

Although that would be the fastest quarterly rate of growth since the second quarter of 2010, it would remain well below last decade's torrid growth rates that turned Brazil into a hot spot for global investments.

"I would be satisfied with any number between 1 percent and 1.3 percent," Mantega said, adding that a 1 percent print would indicate an annualized growth rate of 4 percent.

While investments are expected to decline for the fifth quarter in a row according to the Reuters poll, Mantega said, "next year (investment) is going to be the locomotive of the economy ... growing at a rate of about 8 percent next year and 14 percent in 2014."

A barrage of government stimulus measures and steep interest rate cuts have started to slowly pull Brazil's economy out of near stagnation.

The central bank left its benchmark rate unchanged at a record low on Wednesday, however, in an effort to rein in inflation, which Mantega said was "under control and on a declining trajectory."

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