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Brazil's economy grows 0.2% in the first quarter and 1.9% in twelve months

Saturday, May 31st 2014 - 06:05 UTC
Full article 10 comments
Agriculture again was the main engine of the economy Agriculture again was the main engine of the economy

Brazil's economy grew 0.2% in the first quarter compared to the final three months of 2013, a pace slower than economists had forecast, the government said Friday. Meanwhile GDP rose 1.9% relative to the first quarter of 2013, according to figures released by the state-run Brazilian Institute of Geography and Statistics, or IBGE.

 Accumulated growth in the 12 months through March was up 2.5% from the April 2012-March 2013 period.

The IBGE, meanwhile, revised 2013 growth upward to 2.5%, compared to an initial reading of 2.3%.

Brazil's economy expanded 7.5% in 2010 but the growth rate has been slower in recent years, coming in at 2.7% in 2011 and just 1% in 2012.

Private-sector economists are expecting 1.63% growth this year, far below the government's forecast for growth of between 2.3% and 2.5%.

Brazil's first-quarter performance not only fell short of the forecasts of economists, who were expecting 0.3% growth, but also marked a slowdown compared to the 0.4% expansion in the fourth quarter relative to the previous three months.

Agricultural output rose 3.6% in the first quarter compared to the fourth quarter of 2013, but industry and the services sector posted growth rates of just 0.8% and 0.4%, respectively.

The first-quarter slowdown was due mainly to a 0.1% decline in household consumption, which until last year had been the main driver of Brazilian growth.

Higher spending by families in Latam's largest economy was the result of unemployment and poverty reduction and income gains in recent years.

Top Comments

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  • Anglotino

    Such low growth rates are not enough to reduce poverty levels and raise general living standards.

    The story of the BRICS isn't going so well at the moment. The unceasing lineal growth that was predicted until recently and that would have the BRICS dominating the world economy has come to a great screaming halt.

    The UK has overtaken Brazil in economic size and Italy has a possibility of overtaking Russia now that Russia's economy has tanked. Colombia has overtaken South Africa's economy, which is funny when you think that it is Argentina that has been invited to the BRICS shindig.

    The BRICS economies (less so in China's case) got complacent and thought they didn't need to do anything once they hit high growth rates. They believed the hype that their economies were of a new variety and they didn't suffer the problems that many developed countries had with ageing populations and debt.

    And they were wrong.

    Brazil, China and Russia's TFRs are already below replacement and lower than some developed countries. Their demographic dividend is already working its way through the system so very soon their dependency ratios will start to suffer and that doesn't bode well for attaining developed country living standards. South Africa and India's are dropping faster than many predicted.

    Brazil has missed many opportunities to reform its economy and doesn't seem to be keen to grasp the moment now. Its economy has so many constraints that as soon as growth takes off, inflation takes off quicker and eventually causes the economy to slow down as it is tackled. A country growing only 1.9% per year shouldn't have 11% inflation. The UK is growing 3.1% and only suffering 0.5% inflation. Its economy doesn't suffer restrictions and when they do, there is more a culture of reform to tackle those.

    May 31st, 2014 - 08:17 am 0
  • Brasileiro

    High interest rates to combat inflation causes the credit becomes expensive for the consumer.
    The consumption of the people was stable but the rest of the economy grew stronger and healthier.
    Melhoramos nossa produtividade o que redundará em inflação mais baixa e economia mais competitiva.
    We are preparing for another decade of sustained growth with social justice.

    May 31st, 2014 - 03:16 pm 0
  • yankeeboy

    There's a lot of $ in there from the building for the WC and Olympics. Building they can't afford.
    Without that they'd be in recession.

    May 31st, 2014 - 03:41 pm 0
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