At the end of March 2010, Brazilian President Luiz Inacio Lula da Silva announced the Programa de Aceleração do Crescimento II (PAC II), a second growth acceleration programme to run between 2011 and 2014, and beyond. There are question marks over its fate; presidential elections are due in October 2010 and even if the ruling party is victorious, the plan could be modified or dropped. Nevertheless, PAC II is at least a pointer of what the freight transport sector might expect. It includes BRL958.9bn (US$534bn) to be invested in infrastructure between 2011 and 2014, with a further BRL631.6bn (US$351.9bn) to be invested beyond 2014. In total, the programme envisages investment of BRL1,590.5 (US$885.9bn) in infrastructure. The biggest share of this will go to energy projects, but around 7% of the total is earmarked for transport, with roads and railways getting the lion's share. The plan includes funding for three new high-speed railways. On the shorter term, the macro-economic environment in which the freight transport industry operates is improving in 2010. Brazilian GDP fell marginally in 2009, the year of the international recession, but this year BMI is predicting expansion at a healthy 5.0% rate. The centre-left but generally market-friendly government will want to deliver a good performance in this electoral year, and we see a continuation of Brazil's outward-looking development model, in which international trade plays an important part. In the air freight sector, we see a year of moderate recovery, with cargo volume set to grow by 4.1% to 1.219mn tonnes, following an estimated 7.9% slump in 2009. In the medium term, Brazilian aviation companies will do well, but there will be no immediate return to the pre-slump breakneck rate of expansion (which proved to be unsustainable and contributed to a range of capacity and safety problems). Brazil's ports and shipping sector will not be adversely affected by a certain rebalancing of Brazilian trade, given what we see as a greater emphasis on import growth, which will nevertheless not significantly hold back export performance. BMI predicts that volume at Santos will grow by a strong 13.9% to reach 94.73mn tonnes in 2010. For the rest of our five-year forecast period to 2014, the port will be at the centre of Brazil's dynamic trading activity. At the Port of Itajaí in the south, growth will also be strong; advancing by 18.6% to 7.19mn tonnes. Both ports, along with other major terminals, are likely to see average annual growth in the low double digits over the next five years. The rail freight sector will experience some of the highest growth rates as it benefits from a booming bulk export commodity business. Total tonnes carried by rail, which fell by an estimated 3.6% in 2009, will surge forward by 13.6% in 2010 to 305.6mn tonnes, a record figure. We forecast average annual tonnage growth of 10.0% in the five years to 2014 -- more than double the rate of GDP expansion in the same period. In real terms, Brazil's trade slumped by 10.9% during last year's global recession but is set to bounce back very strongly with 19.6% growth this year. As domestic demand powers ahead, imports will decisively lead the way with growth of 31%, while exports grow by a relatively more modest 6.5% in 2010. Over the forecast period to 2014, import growth will continue to dominate notching up an annual average of 19.7%, while exports will grow by a slower but still respectable annual average of 13.4%. On the whole, we believe the main risks to our Brazilian freight transport forecasts are on the upside. This, however, is not necessarily a good thing. The scenario we have in mind is one in which the government becomes a little too enthusiastic about pump-priming the economy and domestic consumption ahead of the October elections. It has to be said that Brazil has some 'form' in this respect.… [ABSTRACT FROM PUBLISHER]