Brazil's Lula downplays need for big changes to economy

SAO PAULO, July 3 Thu Jul 3, 2014 2:39pm EDT

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SAO PAULO, July 3 (Reuters) - Brazil's influential former President Luiz Inacio Lula da Silva said on Thursday he was not satisfied with the country's slow pace of economic growth, but downplayed the need for major policy changes under his chosen successor.

Lula, a leftist who governed between 2003 and 2010 and retains enormous influence with President Dilma Rousseff, said Brazil has suffered recently from the same slow growth plaguing Europe and the United States, but has created jobs at a faster pace.

Brazil's economy has grown only 2 percent a year since Rousseff took office in 2011, and inflation is running above 6 percent. Investors have been closely monitoring both Rousseff and Lula's speeches for signs she might adopt a more market-friendly approach if she is re-elected in October.

"Obviously, our GDP (growth) isn't the GDP we'd like to have," Lula told a small group of foreign reporters. "When people think Brazil didn't grow much in these past four years, the question I ask is, 'Who grew more than Brazil?'"

A reporter mentioned other countries in Latin America, such as Peru and Chile. "They're few countries," Lula replied.

Lula, 68, then appeared to criticize opposition leaders and Wall Street economists who say that whoever wins in October will have to make a large cut in government spending or otherwise reduce demand in order to restore economic balance.

"There's people out there who say that in order to bring inflation down, we need a little (more) unemployment. We don't think that way," he said.

Lula said Rousseff would rely on infrastructure concessions and other measures, such as investment in science and technology, to spur growth. He cited the investment plan for state-run oil company Petroleo Brasileiro SA, known as Petrobras, as "an exceptional thing."

"We have the conditions to recover Brazil's ability to grow, including in partnership with the private sector," he said. "The reforms we need to make are the smaller reforms."

Lula said that Rousseff, who holds a lead in polls over her more centrist rivals for the Oct. 5 vote, "has all the conditions to be re-elected" because of her strong record of job creation, among other achievements.

Despite slow economic growth, unemployment has remained near record lows of about 5 percent. (Editing by Matthew Lewis)

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