Re: "Brazilian economy slows unexpectedly"

Re: “Brazilian economy slows unexpectedly”

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Source: South American Experts

Dear Editor,

Your November 30th article, “Brazilian economy slows unexpectedly” expresses the growing disappointment of economists and analysts in the recently-divulged poor performance of the Brazilian economic growth on the third quarter of 2012. Nevertheless, more data could have been enlisted in order to provide the reader a better understanding about what that figure really signifies in the context of the current Brazilian macroeconomic situation.

Consumer spending, for example, grew only a meager 0.9 percent in comparison to the previous quarter, but a reasonable 3.4 percent when contrasted to the same period of 2011 (IBGE)1. In addition, the low growth of consumer spending could be explained by an increasing rate of default caused by the ongoing decrease of the interest rate (currently in 7.25 percent, the lowest in recent years)2 and easy access to credit, a fact that could have been usefully cited in your article.

An even more important figure that was ignored in your segment was the unemployment rate, which bottomed out in October at its lowest percentage in 10 years (5.3 percent3), not to mention the 1.1 percent growth in industrial production. This was the case even though from August to September of this year exports to China and the EU decreased by 22.19 and 14.49 percent respectively. General exports decreased 14.44 percent in the third quarter of 2012, contrasting to the same period in 2011.4

Exports are still an important variable for economic growth in Brazil, since the country still cannot rely on its unequally-structured domestic market in seeking a GDP boost. In the context of the worst world economic crisis in 80 years, Brazilian GDP will only grow considerably (at an expected rate surpassing 5 percent) when public policies are strongly focused in reducing the “Brazil cost”. In other words, it seems that economic growth goals should not be based only on consumer spending, but also on investment, so that a policy change might be necessary to change a 0.6 percent growth rate.

Sincerely,

Paula Beatriz Mian, Research Associate at the Council on Hemispheric Affairs

 

In response to BBC News: “Brazilian economy slows unexpectedly”

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1 http://www.ibge.gov.br/home/presidencia/noticias/noticia_visualiza.php?id_noticia=2272&id_pagina=1

2 http://www.bcb.gov.br/?COPOMJUROS

3 http://economia.estadao.com.br/noticias/economia%20brasil,taxa-de-desemprego-em-outubro-fica-em-53-a-mais-baixa-em-10-anos-,135399,0.htm

4 http://www.desenvolvimento.gov.br/sitio/interna/interna.php?area=5&menu=1161