Brazil's GDP grows 7.5 percent in 2010

Brazil's

gross domestic product grew 7.5 percent in 2010 after a 0.2 percent slip the year before, the government said Thursday.

It was the highest growth rate since 1986, when the economy also grew by 7.5 percent.

The IBGE statistics bureau said that last year's expansion was due mainly to a 10.1 percent rise in industrial output.

The IBGE said GDP in the last quarter of 2010 was 0.7 higher than in the third quarter and 5 percent higher when compared to the same period one year earlier.

The growth led the government to order $30 billion in spending cuts last month to battle inflation.

The government said it will remove stimulus packages put in place two years ago to counteract the global financial crisis. Those included tax breaks on auto sales, subsidies and increased government spending.

On Wednesday, the central bank hiked a key interest rate to keep a lid on inflation, whose 12-month rate is hovering around 6 percent, well above the government's target of 4.5 percent.

The bank raised the benchmark Selic rate to 11.75 percent, up 50 basis points.