Brazil to drop to 13th position among world’s largest economies in 2021 – Austin Rating
RIO DE JANEIRO, BRAZIL – Brazil is expected to drop from 12th position in the list of the world’s largest economies in 2021. Latin America’s largest economy and the No. 2 economy in all of the Americas is a giant with more than 210 million people but has struggled for several years.
A survey by the risk rating agency Austin Rating, based on new projections from the International Monetary Fund (IMF) for the global economy, shows that the country will be overtaken by Australia and will end next year as the 13th largest economic power in the world.
In 2010, Brazil was the world’s seventh-largest economy but has since grown less than its competitors.
The data from the new IMF report confirmed that the Brazilian economy fell 3 positions in 2020, to 12th place, after the historic 4.1% slump in GDP (Gross Domestic Product) last year, as already indicated in a ranking released in March by Austin Rating.
Last year, the Brazilian economy was surpassed by Canada, Korea, and Russia, considering the countries’ GDP in current values, in dollars.
Between 2010 and 2014, Brazil remained in 7th position. At its worst moment, in 2003, it was in 14th position. Austin Rating’s ranking compares the largest economies in the world since 1994.
What explains the loss of position
Chief economist at Austin Rating Alex Agostini, explains that the main explanation for the loss of Brazil’s positions in 2020 was the pandemic effect associated with increased domestic uncertainties amid concerns about the health of public accounts and greater distrust of investors.
He also points out that the Brazilian real depreciated against the dollar (-31%) more than the currencies of direct competitors such as Russia (-11.9%) and Korea (-1.3%). The Canadian dollar, on the other hand, appreciated by 1.1%.
The fall in Brazil’s GDP in 2020 was also greater than that registered by Russia (-3%) and Korea (-1%) but smaller than the retraction in Canada (-5.4%).
Brazil’s GDP performance in 2020 ranked 21st in comparison among the 50 largest economies in the world.
Risk of also being overtaken by Spain
According to IMF projections, Brazil should remain in 13th place until at least 2023.
Austin evaluates that Brazil runs “serious risks” of being overtaken by Spain in 2021, leaving the country in the 14th position due to the euro’s strengthening, and estimates that the Spanish economy should grow well above the Brazilian.
The IMF projects a 6.4% increase in Spain’s GDP, while for Brazil, the estimate is a 3.7% growth in 2021, below the global average.
For Agostini, the Brazilian economy’s performance in 2021 will also depend on its ability to move forward with the vaccination campaign against the coronavirus and the approval of structural reforms.
According to the survey, the Brazilian GDP’s participation in the global economy in 2021, in dollars, should reach 1.59%. If the projection is confirmed, it will be the lowest rate since 2004 (1.52%).
“In 41 years, the 2021 rate will be higher only in 8 years: 1980, 1981, 1983 and 1984, which were years affected by the 1st and 2nd oil crises; also in 1992 due to the sequestration of savings and hyperinflation; besides the years 2002, 2003 and 2004, due to the strong devaluation of the real”, highlights Agostini.
Last week, the financial market economists reduced the estimate for the Gross Domestic Product (GDP) increase from 3.18% to 3.17%, according to the Central Bank’s Focus research.
It was the fifth consecutive drop in the indicator. For 2022, the market lowered its expected expansion of the Brazilian economy from 2.34% to 2.33%.
Source: G1
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