BRASILIA, June 14 (Xinhua) -- Brazil, Latin America's largest economy, has fallen into technical recession after registering two consecutive quarters of declining GDP.

    Official statistics show that Brazil's GDP shrank 1.8 percent year-on-year in the first quarter and contracted 0.8 compared with the fourth.

    The first-quarter result combined with the fourth quarter's 3.6 percent decline from the third quarter to push Brazil into the technical definition of a recession _ two consecutive quarters of falling GDP.

    Brazil's unemployment rate, meanwhile, reached a two-year high of nine percent.

    To actively manage the crisis, Brazil has undertaken a series of macro-control measures and adopted stimulus plans in addition to seeking expanded cooperation with other nations such as China.

    GOVERNMENT ACTS SWIFTLY

    There is no doubt Brazil moved swiftly to adjust the country's economic policies and ease the impact of the global slump.

    Brazil's Central Bank has recently cut its basic annual interest rate (Selic) by one percentage point to 9.25 percent. The rate was 13.75 percent in January.

    To stop the sharp depreciation of the real, which has lost more than 30 percent against the U.S. dollar since the start of the crisis, the Central Bank sold millions of dollars in repurchase agreements or dollar swaps and increased the amount of money for lending.

    President Luiz Inacio Lula da Silva in January signed a law creating a 14.2 billion reais (6.4 billion dollars) sovereign wealth fund. Lula also granted tax breaks to banks, automakers, construction firms and airlines late last year.

    Thanks to a cut in the industrialized products tax, Brazil's auto industry saw a recovery of production in the first quarter of 2009.

    The tax cut triggered a record-high sale of 271,494 new vehicles in March, up 17 percent from the same period in 2008.

    Car sales for the first quarter this year reached record-high levels as well, with 668,314 registered sales.

    Brazil, aware of the agricultural sector's importance to the national economy, also has taken a series of measures to help farmers and agricultural enterprises.

    It has encouraged banks to grant more loans to farmers and agricultural enterprises.

    According to the Finance Ministry, the sector is expected to receive loans of at least 15.8 billion reais (6.79 billion dollars) in 2009.

    BRAZIL, CHINA ENJOY IMMENSE POTENTIAL OF COOPERATION

    China and Brazil, though far apart geographically, have seen continuous development in bilateral trade in recent years, with immense potential for the future.

    Bilateral trade volume in 2008 reached 48.5 billion dollars, a 63.2-percent increase year on year.

    Chinese exports to Brazil reached 18.75 billion dollars, an increase of 64.9 percent, while China's imports from the South American nation surged by 62.2 percent to 29.75 billion dollars.

    The booming development points to great potential in bilateral trade, Wang Qingyuan, commercial counselor at the Chinese embassy in Brazil, told Xinhua.

    Lula, who visited China in May, said the two nations have a "shared responsibility to help bring about the fundamental reforms in global governance that the world so urgently needs."

    China already is Brazil's largest trading partner, but Lula said he still sees the potential for a huge expansion in bilateral trade.

    Qiu Xiaoqi, the Chinese ambassador to Brazil, said China and Brazil enjoy common ground on many world issues, including how to establish a new international economic order and how to reform the current financial system.

    The two countries will conduct close cooperation on those issues, Qiu told Xinhua.

Special Report:  Global Financial Crisis