Brazil’s national statistics agency announced today that the country’s gross domestic product expanded 0.4% over the previous three months, the fastest pace in a year.
Although growth, even slow growth, is a good sign for the Brazilian economy, few economists expect Brazil to regain the torrid expansion it recorded for much of the past decade. The country’s industrial output is slowing as demand from Europe and China slackens.
Overall, Brazil’s GDP grew only 1.64 percent during the April-June period. In order to help the economy regain its strength, Brazil’s government, under President Dilma Rousseff is cutting taxes on payroll, cars and appliances and also implementing policies to help weaken the country’s currency, the real.
So far this year Brazil’s real has lost more value more than any other major currency but exports and growth have still not rebounded. Brazil’s economy currently trails Russia, India, China, and even Mexico in terms of growth.
In a recent article for Bloomberg, David Biller explained “resilient consumer demand hasn’t proved sufficient to sustain an industrial sector battered by the global slowdown. Industrial output fell 5.5 percent in June from the year before.
With prices for Brazil’s iron-ore and other raw materials under pressure from slow growth in China, exports so far this year are down 1.7 percent from 2011 levels.
”For several years, many economists have been expressing concerns about the resiliency and long-term growth potential of Brazil’s economy.
In a 2010 article for America’s Quarterly, Peter Kingstone, a Latin America expert from the University of Connecticut explained “Depending on how severe China’s slowdown is—and whether other nations step in to fill the void—Brazil’s overemphasis on commodities could prove dangerous not just to the country’s short-term fiscal health, but also to its long-term prospects for economic stability and development.”
These concerns have not eased. In a July 2012 article, Kingstone repeated the message, explaining “heavy reliance on commodities has created significant challenges that threaten the economy’s medium- and long-term prospects.”
Brazil’s economy, once the juggernaut of Latin America, won’t even reach GDP growth of 2% this year.
forbes.com
Although growth, even slow growth, is a good sign for the Brazilian economy, few economists expect Brazil to regain the torrid expansion it recorded for much of the past decade. The country’s industrial output is slowing as demand from Europe and China slackens.
Overall, Brazil’s GDP grew only 1.64 percent during the April-June period. In order to help the economy regain its strength, Brazil’s government, under President Dilma Rousseff is cutting taxes on payroll, cars and appliances and also implementing policies to help weaken the country’s currency, the real.
So far this year Brazil’s real has lost more value more than any other major currency but exports and growth have still not rebounded. Brazil’s economy currently trails Russia, India, China, and even Mexico in terms of growth.
In a recent article for Bloomberg, David Biller explained “resilient consumer demand hasn’t proved sufficient to sustain an industrial sector battered by the global slowdown. Industrial output fell 5.5 percent in June from the year before.
With prices for Brazil’s iron-ore and other raw materials under pressure from slow growth in China, exports so far this year are down 1.7 percent from 2011 levels.
”For several years, many economists have been expressing concerns about the resiliency and long-term growth potential of Brazil’s economy.
In a 2010 article for America’s Quarterly, Peter Kingstone, a Latin America expert from the University of Connecticut explained “Depending on how severe China’s slowdown is—and whether other nations step in to fill the void—Brazil’s overemphasis on commodities could prove dangerous not just to the country’s short-term fiscal health, but also to its long-term prospects for economic stability and development.”
These concerns have not eased. In a July 2012 article, Kingstone repeated the message, explaining “heavy reliance on commodities has created significant challenges that threaten the economy’s medium- and long-term prospects.”
Brazil’s economy, once the juggernaut of Latin America, won’t even reach GDP growth of 2% this year.
forbes.com
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