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By Ben Tavener, Senior Contributing Reporter

SÃO PAULO, BRAZIL – After celebrating becoming the world’s sixth largest economy and relegating the UK to the number seven spot at the end of 2011, Brazil’s economy has slid back to its previous position, after GDP (gross domestic product) figures for both countries for 2012 were revised. 

Brazil’s Finance Minister Guido Mantega, Brazil News
Brazil’s Finance Minister Guido Mantega, photo by Elza Fiúza/ABr.

Brazil’s GDP total for 2012 – the value of all goods and services produced over the year – was revised down to 0.9 percent by the IBGE (Brazilian Institute of Geography and Statistics).

Economists suggest this is at least partly due to the decline in the value of the Brazilian currency – the real.

Figures for the UK economy were revised up from zero to 0.2 percent growth, but even this means the UK economy grew to US$2.3 trillion against Brazil’s US$2.2 trillion.

Brazil’s Finance Minister Guido Mantega blamed both droughts and heavy rain for poor performance from agriculture and livestock sectors, which he describes as “less than had been expected.”

Mantega also said that industry had produced “weak results” and that 2012 had been affected by the legacy of the 2009 economic crisis.

Brazil overtook the UK in 2011 by a small margin and is not expected to re-overtake it until at least 2014. However, economists are still optimistic about the longer-term fortunes of Latin America’s biggest economy – with forecasts that Brazil will surge up into the top fifth world economy by the mid 2020s, overtaking Germany, but also vying for position alongside fellow emerging economy India.

Brazil’s government has tried a number of stimulus tactics to kick-start the economy, including record-low interest rates, tax cuts, multi-billion dollar infrastructure projects and attempts to keep the real in check, but some economists say they are not working and that a new approach is needed.

Brazil’s current economic situation has been likened by some to a hangover after growing too fast; although Brazil does not expect to see the kind of growth seen in 2010, when the economy grew by 7.5 percent, it does expect the economy to grow by around 3.1 percent in 2013. Already industry is upbeat about the coming year after better-than-expected results in January.

Read more (in Portuguese).

* The Rio Times Daily Updates feature is offered to help keep you up-to-date with important news as it happens.

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