90% of Countries Will Grow More Than Brazil This Decade
By Richard Mann, Contributing Reporter
RIO DE JANEIRO, BRAZIL – At the end of this decade, the Brazilian economy should reap another disappointing result: of the 191 countries monitored by the International Monetary Fund (IMF), 90 percent will register an average growth better than that of Brazil between 2011 and 2020.
The figures are part of a study by the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre/FGV), conducted by Marcel Balassiano. If confirmed, the result will be the worst since the 1980s, when data began to be compiled by the IMF.
IMF projections indicate that the country’s Gross Domestic Product (GDP) had an average growth of only 0.9 percent in this decade – it will be the worst result in 120 years.
By comparison, the figure is quite modest in relation to the expected advance for emerging countries (4.9 percent) and the nations of Latin America and the Caribbean (1.7 percent).
In absolute numbers, this decade Brazil will only have an average growth better than that of 18 countries. Among them is Argentina. In recession and with the help of the IMF, the neighboring country should have an average growth of 0.6 percent.
Portugal, Italy and Greece Worse
According to the survey, Portugal, Italy, and Greece should also have worse results than the Brazilian economy – these European countries faced a very complicated beginning of the decade. The worst performing in the decade are Libya and Venezuela.
In the past decade, between 2001 and 2010, when the country harvested the best result in this type of comparison, 56 percent of economies had superior performance to that of Brazil.
In the period, the Brazilian economy grew 3.7 percent, a performance closer to that observed in emerging countries (6.2 percent) and above that found among Latin American neighbors (3.2 percent).
“It was a decade in which many economies took advantage of the commodity boom, and Brazil was able to benefit more than other Latin American countries,” says Balassiano.
The current decade has been marked by frustrating results for Brazil. In 2015 and 2016, economic activity retreated 3.5 and 3.3 percent, respectively.
It was a negative milestone for the country’s economic history. Brazil has not recorded two consecutive years of GDP retreat since 1930 and 1931 when the world was affected by the effects of the 1929 economic recession.
The picture is even more complicated because the recovery has been very slow – in the last two years, Brazil grew only 1.1 percent, and GDP growth forecasts for 2019 is getting weaker and weaker.
Analysts consulted by the Central Bank’s Focus report expect an advance for the country’s economic activity of only 1.7 percent. In January, there was the expectation that Brazil could grow close to 3 percent.
Cyclical and Structural Problems
In the reading of economists, the country is moving slowly because it deals with both cyclical and structural problems.
In the list of economic problems, Brazil feels the effects of the global economic slowdown, especially from Argentina, a major importer of manufactured goods. On the structural side, the Brazilian economy has to address a series of reforms to improve GDP performance.
Today, the main doubt is about the ability of Jair Bolsonaro’s government to approve a robust pension reform – the proposal of the team led by Minister Paulo Guedes predicts a saving of R$1.2 trillion (US$300 billion).
The measure is considered essential for the settlement of public accounts and for investors to regain confidence and investments in Brazil.
“There is a certain frustration with the pace of progress of the reform agenda. This leads to a reversal in the confidence of consumers and entrepreneurs, which hinders the decision of consumption and investment,” said Alessandra Ribeiro, economist and partner of the consultancy firm Tendências.
All this slowness is already beginning to compromise the projection for economic growth next year.
Expectations for the GDP in 2020 are close to 2.5 percent, but a number of economists already put a downward bias in current forecasts in the face of the weaker legacy that 2019 will leave.
“In our reading, 2020 may be another year of weak growth. For now, we are with 2.7 percent expansion next year, but there are chances of reviewing this number downwards, and not upwards,” says Sergio Vale, chief economist at MB Associados.
More: Brazil news in English, every day from The Rio Times.
This article was produced by The Rio Times’ automated AI newsroom. Editorial responsibility: Matthias Camenzind, Publisher and Editor-in-Chief. How we use AI · Report an error