ECONOMIC growth in Brazil is predicted to reach 4.1 per cent this year - the best annual upturn since 1986. ''Yet the truly decisive time will be next year,'' said Consul General Arnaldo Carrilho. ''That is when Brazil must elect a new president, and new federal and state governments. The outcome of those elections will crucially affect the way the country deals with the difficulties we still face,'' he said. ''[But] I am firmly convinced our real problems are not economic. Brazil is, after all, the world's ninth largest economy, and the country is rich in many vital resources.'' ''It is the political and social matters that we must address, and the election will determine how these are approached,'' said Mr Carrilho. ''But the international economic reality will compel whichever government is in power to tackle developmental issues in broadly the same fashion. ''There is no realistic alternative to furthering the programme of economic liberalisation already embarked upon,'' he said. As part of that reform process, J. E. Andrade Vieira, the Brazilian Minister for Industry, Trade and Tourism, will visit Hong Kong in October to chair an important seminar focusing on trade and investment opportunities in Brazil. Accompanying Mr Vieira will be a powerful delegation of about 24 Brazilian industrialists and other government officials. Mr Carrilho will be drawing on his contacts among Hong Kong's business luminaries in compiling the invitation list. Since the minister is also a prominent banker, and Brazil is anxious to encourage foreign direct investment, at the top of the list will be figures such as John Gray, of Hongkong Bank, and David Li Kwok-po, of the Bank of East Asia. Others certain to receive an invitation include the most senior executives of Jardine's, Swire, Wharf, Cheung Kong, CITIC and also Victor Fung of the Trade Development Council. ''The seminar has a dual purpose; to promote Brazil as an investment opportunity, and to allow us to learn from the massive experience of Hong Kong's key players,'' said Mr Carrilho. The keynote lecture will come from Roberto Campos, a leading Brazilian economist and a member of parliament. ''He was my main mentor more than 30 years ago, and he has been a strong defender of the Hong Kong economic model, and for decades has called for its application in Brazil,'' Mr Carrilho said. Mr Carrilho, when considering the past four decades of Brazil's economy, said that from the mid-1950s through to the mid-1970s, Brazil had recorded powerful economic growth; at times it exceeded 11 per cent per year. However, the critical weakness was oil import dependency, so the twin oil shocks of the 1970s - when the cartel of Oil Producing and Exporting Countries (OPEC) suddenly cut daily production levels and raised prices sharply - sent the country's finances deep into the red. The burden of the massive debt, together with woefully inefficient state-run industries, put pressure on the whole economy. Slow political change eventually led to a civilian president being appointed in 1985, and, then, in 1989, came the first presidential elections in almost three decades. President Collor's strategic reform process represented a total change of economic model, but brought in its wake a raft of social problems based, above all, on poverty. The privatisation programme is the centrepiece of the transformation. Its main aim is to redefine the role of the state in the Brazilian economy - to reduce its size and to make it lighter, more dynamic and responsive. The three specific objectives are to reduce the public sector debt, to increase competition and to widen share ownership. A new law requires all the financial proceeds of privatisation to be set aside to cut public-domestic and foreign-debt levels. Deregulation is the method for promoting competition. Previously, state-run monopolies were being broken up before being privatised. Foreign participation is also welcomed. The third objective is being handled by offering shares in newly privatised companies to its employees and also the public. Mr Carrilho said Brazil was enjoying success thanks to the MERCOSUL - the South American equivalent of the European Community. ''This is a four-country zone, including Brazil, Argentina, Uruguay and Paraguay. There are no trade or tariff barriers, and our goods are doing well in straight, open competition inside this block,'' he said.