Saturday, January 26th 2013 - 21:23 UTC

Lagarde surprised at the ‘very slow’ recovery of the Brazilian economy

IMF Managing Director Christine Lagarde said she is unsure about Brazil’s economic outlook despite the country’s official estimate of 3.5% growth this year, since recovery is “very slow” as the 1% of 2012 showed.

The IMF chief admits the country could be going through ‘a strong adjustment phase’

Dilma is expected to bid for re-election in 2014 and implementing reforms is becoming far more difficult

“I don’t understand why Brazil’s growth recovery rhythm is taking so long”, Lagarde was quoted by the Brazilian media covering the Davos World Economic Forum.

“Maybe the slow Brazilian recovery is because the country is going through a strong adjustment phase” admitted the IMF chief in an interview with Folha de Sao Paulo in the sidelines of the economic forum which brings together world leaders from politics and corporations.

But Lagarde is not the only official expressing concern about Brazil’s slow take-off. Charles Dallara, managing director of the Institute of International Finance said many of the world’s largest banks have expressed concerns about Brazil and suggested the execution of ‘structural reforms’ to unlock growth believing the country is expanding below its potential.

But such measures are not expected to occur in the next months since the country is currently in a pre-electoral period, ahead of the 2014 presidential election when President Dilma Rousseff is expected to bid for another four years.

Italian Prime Minister Mario Monti said he believed the financial crisis in Europe is partly responsible for Brazil’s low economic growth as the EU is a key market playing a fundamental role in Brazilian exports.

Last week in a political rally President Rousseff pledged that 2013 would see Brazil experience sustained growth and will be the year to harvest the efforts of 2012 when  the economy only managed to expand 1%, according to primary estimates since final figures are still pending.

Government officials are avoiding advancing any precise percentages but admitting that the economy this year should expand in the range of 4%, while the IMF estimates 3.5% and the latest Central bank survey among the leading corporations and CEO anticipates 3.29%.
 

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1 willi1 (#) Jan 27th, 2013 - 10:47 am Report abuse
next comment of c lagarde:

“Lagarde surprised at the ‘very low’ recovery of the Argentine statistics.”
2 LatAm (#) Jan 27th, 2013 - 05:22 pm Report abuse
she doesn't understand because she chooses not to understand. It's a labor supply problem- unemployment is very low but labor costs go up faster than productivity. State employees being some of the most unproductive and expensive. Also we have bottlenecks that restrict growth Brazil but these issues are actually being addressed. we are in the bottom of the j-curve...
3 reality check (#) Jan 27th, 2013 - 07:25 pm Report abuse
It's not that she does not understand, she has to go by figures and figures alone. That's why the Argentines are at odds with the IMF, because their figures can not be trusted to be true.
4 LatAm (#) Jan 28th, 2013 - 11:01 am Report abuse
I guess she shouldn't make such public statements then. The bottlenecks in Brazil are astonishing- so much pent up economic activity stuck on the roads and ports and choked up because of red tape. You have to spend time here to really understand it. That is a major opportunity. It is not an issue of lack of demand, it is inefficiency and this can be addressed. Case in point:
www.bloomberg.com/news/2013-01-28/epl-frees-30-port-capacity-to-ease-bottleneck-corporate-brazil.html
Asinine rules like this have held us back. The fact that Brazil is even growing with such issues amazes me. As the issues are worked through growth will pick up significantly

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