MercoPress. South Atlantic News Agency

Currency appreciation makes Brazil leading Latam economy

Brazil became the leading Latinamerican economy in 2005, ahead of Mexico, and ranked eleventh in the world according to data released Thursday by the country's Geography and Statistics Institute.

Brazil's GDP grew 2.3%in 2005 reaching 795.77 billion US dollars based on the average exchange rate.

However the GDP figure was significantly affected by appreciation of the local currency, the Real, against the US dollar, something analysts said weighed even more heavily than actual expansion of production of goods and services.

Actually the expansion of the South American nation's GDP was helped not so much by real growth, which barely totaled 2.3% but by the 12.4% fall in the value of the dollar against the real in 2005, argued economist Alex Agostini from Austin Rating.

Last year's Brazil' 2.3% growth was the lowest of Latinamerica only ahead of Haiti.

Brazil's GDP growth allowed it to move from position 15 (2004) to 11 (2005) among the world's largest economies, according to International Monetary Fund figures. Last year Brazil's economy trailed only those of the United States, Japan, Germany, Britain, France, China, Italy, Spain, Canada and South Korea.

In comparison to 2004, Brazil's economy ranked above those of India, Australia, the Netherlands and Mexico which ranked 13 with 758.1 billion US dollars. Russia occupied position 12 with 772.2 billion US dollars.

Last year, Brazil accounted for about one-third of Latin America's GDP and not only surpassed Mexico in economic output, but it also expanded its lead over Argentina, which had a GDP of 177.3 billion; Venezuela, 131 billion; Colombia, 112.3 billion; and Peru with 77.2 billion.

Until 1998, Brazil had the eighth-largest economy in the world and the largest in Latin America, but it lost the regional lead in 2001.

However in per capita income Brazil ranked 72 in the world with 4.333 US dollars, behind Argentina (71); Panama (70) and Costa Rica (69).