Brazil's growth projection slashed
Source: Bloomberg News |
December 4, 2012, Tuesday
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Print Edition
Print Edition
ANALYSTS covering Brazil's economy slashed their forecast for growth after the economy expanded at half the projected pace in the third quarter.
Brazil's economy will grow 1.27 percent this year and 3.7 percent in 2013, according to the median estimates in a central bank survey of about 100 analysts published yesterday. It was the biggest single-week cut in 2013 growth forecasts all year. In the previous week's survey, analysts forecast gross domestic product to rise 1.5 percent in 2012 and 3.94 percent next year.
"Economists will keep reducing their growth forecasts," Enestor Dos Santos, senior economist at Banco Bilbao Vizcaya Argentaria SA, said in a telephone interview from Madrid. "I expect that the government will take additional measures, such as tax cuts, more fiscal stimulus and more public credit. There will be a stronger emphasis on increasing competitiveness."
President Dilma Rousseff, who reaches the half way mark of her four-year term on January 1, has tried to revive the economy by cutting taxes for consumers, freeing up credit and inviting private firms to overhaul roads, airports and other overburdened infrastructure. The central bank has also cut borrowing costs the most of any Group of 20 nation during that period to a record 7.25 percent before halting rate cuts last week.
The world's second-largest emerging market has responded unevenly to the government's efforts. Gross domestic product grew in the third quarter by 0.6 percent, half the pace forecast by economists, as investments fell for the fifth straight period.
If the current 2012 growth forecast holds, Brazil's economic performance since Rousseff took office would be the worst two-year start to a presidential term since Fernando Collor was elected in 1989. Collor was impeached in 1992.
Growth is also trailing Russia, India and China - the so-called BRIC group of major emerging markets - as well as the US, which expanded at an annual 2.7 percent pace in the third quarter compared with Brazil's 2.4 percent. Brazil's economy grew 2.7 percent last year, and 7.5 percent in 2010.
Still, record low unemployment continues to back strong domestic demand. Retail sales in September rose for the fourth straight month, while car sales added 19 percent in October.
Brazil's economy will grow 1.27 percent this year and 3.7 percent in 2013, according to the median estimates in a central bank survey of about 100 analysts published yesterday. It was the biggest single-week cut in 2013 growth forecasts all year. In the previous week's survey, analysts forecast gross domestic product to rise 1.5 percent in 2012 and 3.94 percent next year.
"Economists will keep reducing their growth forecasts," Enestor Dos Santos, senior economist at Banco Bilbao Vizcaya Argentaria SA, said in a telephone interview from Madrid. "I expect that the government will take additional measures, such as tax cuts, more fiscal stimulus and more public credit. There will be a stronger emphasis on increasing competitiveness."
President Dilma Rousseff, who reaches the half way mark of her four-year term on January 1, has tried to revive the economy by cutting taxes for consumers, freeing up credit and inviting private firms to overhaul roads, airports and other overburdened infrastructure. The central bank has also cut borrowing costs the most of any Group of 20 nation during that period to a record 7.25 percent before halting rate cuts last week.
The world's second-largest emerging market has responded unevenly to the government's efforts. Gross domestic product grew in the third quarter by 0.6 percent, half the pace forecast by economists, as investments fell for the fifth straight period.
If the current 2012 growth forecast holds, Brazil's economic performance since Rousseff took office would be the worst two-year start to a presidential term since Fernando Collor was elected in 1989. Collor was impeached in 1992.
Growth is also trailing Russia, India and China - the so-called BRIC group of major emerging markets - as well as the US, which expanded at an annual 2.7 percent pace in the third quarter compared with Brazil's 2.4 percent. Brazil's economy grew 2.7 percent last year, and 7.5 percent in 2010.
Still, record low unemployment continues to back strong domestic demand. Retail sales in September rose for the fourth straight month, while car sales added 19 percent in October.
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