The Organization for Economic Cooperation and Development (OECD) said Thursday that the Brazilian government's tax cuts to offset the effects of the global financial crisis have caused a higher fiscal deficit in the country, and could reach an even more alarming level in 2010.

According to the OECD, Brazil's fiscal deficit will jump from 2.0 percent of the gross domestic product (GDP) in 2009 to 3.5 percent in 2010. The OECD recommended a gradual decrease in fiscal stimuli in 2010 so as to achieve economic recovery.

The OECD also projected that Brazil's GDP will register zero growth in 2009 as a result of the crisis, but will record a 4.8 percent increase in 2010 thanks to a sharp increasing demand in the domestic market. In 2011, the country's GDP is expected to grow by 4.5 percent.

The organization also stated that Brazil's inflation rate will remain at 4.0 and 4.5 percent in 2009 and 2010 respectively, although the Brazilian government set an inflation target of 4.5 percent with a two percentage point tolerance for both years.

The OECD has released projections for other countries as well: in 2010, Mexico's GDP is to expand 2.7 percent and Chile's 4.1 percent. The developed countries as a whole are expected to grow 1.9 percent in 2010.