The Brazilian economy grew a mere 0.9% in 2012 despite government stimulus measures, its worst performance in three years, official statistics showed Friday. But prospects for the coming years are considered encouraging given the international events to be hosted by Brazil and the electoral calendar.
In 2009 the world's sixth largest economy contracted by 0.3% as a result of the international economic crisis.
The Brazilian Institute of Geography and Statistics (IBGE) said that in the fourth quarter of last year, GDP rose 0.6% over the previous quarter.
The government began 2012 with an annual growth forecast of 4.5% but gradually revised it downward throughout the year, as did financial markets. Analysts and the Central Bank had expected GDP growth of around one percent.
In 2010, the Brazilian economy expanded a sizzling 7.5% but the following year grew only 2.7%.
Last year, despite interest rates at a historic low of 7.25% and tax exemptions decreed by the government to stimulate industry, consumption and investments, Brazil posted lower GDP growth than Peru, 6.29% and Mexico, 3.9%. The country also fared worse than Chile, 5.5% and Colombia, 3.6%, according to Central Bank estimates.
Obviously, it is a very weak growth rate for a large emerging market like Brazil with so much potential, and below its potential growth rate, said Irene Mia, the Economist Intelligence Unit's regional director of Latin America.
The pace of recovery seems to have picked up toward the end of 2012, but even the overall GDP growth for the year will be disappointing.
Ms Mila said she expects the recovery pace to pick up to 3.5% this year, provided investment will be supportive but risks are on the downside.”
The EIU director believes that in the next five years, the national economy will get a boost from the major sporting events it will host --the 2014 World Cup and the 2016 Rio summer Olympics -- as well as from the electoral cycle with presidential polls scheduled for next year.