In a conference call last week, Brazil’s Finance Minister Guido Mantega confirmed that Brazil’s GDP grew 7.5 percent in 2010, the country’s highest rate of growth since 1986. Although this is hardly a surprise (the 7.5 figure was projected six months ago), that annual figure includes a laggard fourth quarter of 0.7 percent growth. However, 7 percent-plus growth doesn’t seem to be a growth target of the government.
What then does the 7.5% figure really mean? Most importantly, because poverty alleviation is a priority for the government, the country is on track to further reduce poverty and improve quality of life in Brazil. Also of interest is what Mr. Mantega left unsaid: the official size of Brazil’s economy is now $2.1 trillion, making it the seventh-largest economy in the world. (By many forecasts, Brazil will have the world’s fifth-largest economy by 2025.)
In the Q&A session, Minister Mantega fielded questions about inflation in Brazil, the impact of government stimulus in boosting growth in 2010, and where growth is likely to be in 2011 and 2012. To all these, the Brazilian government speaks with equanimity: inflation is slightly higher than is ideal but the government has an eye on it; government stimulus probably did add a bit of one-time growth to 2010 GDP figures; and GDP is likely to settle at around 4.5-5.0 percent in 2011 with no inflationary pressure.
Minister Mantega mentioned that Brazil was achieving balanced growth, between exports and imports—but he made no specific mention of the export mix; the ratio of commodity and industrial exports. Unaddressed, and possibly of concern, are the effects of rising trade with China. Brazil’s overall export mixed has shifted in recent years toward more commodities and fewer manufactured goods. If Brazil doesn’t begin to rectify this soon it could face a serious erosion of its industrial base as its presal oil enters production.
My thanks to Judah Grunstein at World Politics Review and Janelle Moritz at Fleishman-Hillard for patching me in on the call.
