The Brazilian government announced Thursday that Brazil has become the world’s seventh economy after having expanded 7.5% in 2010, the strongest in 24 years. Brazil’s GDP now stands at US$ 2.1 trillion US dollars with a per capita income of US$ 11.185.
“If we consider prices and purchasing power, a pending homework from the World Bank and the IMF, Brazil’s GDP is US$ 3.6 trillion, which places us in fifth place ahead of France and the UK”, said Finance minister Guido Mantega.
The announcement was done on the day IMF Managing Director Dominique Strauss-Khan began an official visit to the country. The IMF chief has been insisting the time has come for the leading emerging countries “to cool their overheated economies”.
“It’s a very reasonable number which shows Brazil has the capacity to grow”, said President Dilma Rousseff who added that with not much effort Brazil will expand 4.5% to 5% in 2011, although discarding the idea of emulating the 2010 record.
Rousseff said that the target of her administration is “a reasonable, sustainable and standing growth rate” and under no circumstances will inflation be left out of control. “We’ll keep an eye on stability and another on investment”, she promised.
Last year Brazil’s GDP was boosted by a 10.1% growth of manufacturing and 6.5% agriculture and livestock, according to the official statistics office IBGE. The big 2010 push followed the slight 0.3% contraction of 2009 in line with global recession.
Mantega also outlined that last year Brazil had the world’s fifth strongest growth among the G-20, behind China, India, Argentina and Turkey. “Since Brazil expanded above average we imported much more and thus helped other countries out of the crisis”.
Brazil’s Finance minister added that since the economy has begun to decelerate, this is positive because it diminishes the risk of inflation. This week the Central Bank hiked the basic Selic rate to 11.75% precisely to combat overheating of the economy and the government ratified its decision to cut budget expenditure by 30 billion US dollars.
According to the statistics office, domestic consumption (60%) was crucial for Brazil’s record GDP expansion last year together with overall investment that increased 21.8%. IBGE also indicated that the economy expanded 0.7% in the last quarter over the previous quarter, and 5% over the last quarter of 2009.
According to US Treasury Secretary Timothy Geithner the rapid growth of emerging economies like Brazil China and India is boosting US exports,
“Emerging economies like China, Brazil and India are growing very rapidly. That growth is helping to support rapid growth in US exports which in turn is raising income and employment across the United States in manufacturing and high tech and agriculture,” Geithner said in his testimony before the Senate Foreign Relations Committee.
The US, he said, is working in the G-20 to help build consensus on long-term reforms that will provide the foundation for a more balanced, more stable global economy.
“We lay out a framework for cooperation that includes movement to more flexible exchange rates by emerging economies, a type of early warning mechanism to help reduce the risk that we see the re-emergence of large external trade imbalances, and help for emerging economies to manage the challenges that come with large flows of capital,” he said.
“A second priority – we’re working very hard to build a more stable international financial system with better oversight of the major global financial institutions – the major banks – and the global financial markets,” Geithner noted.
“We’re not going to base future growth in the United States on consumption fueled by borrowing from other countries. Our growth in the United States is going to be come much more from investment and from exports, not from unsustainable financing of housing booms, excess consumption,” said the US official.
The Treasury Secretary said the global economy is now expanding after the profound crisis of the last three years, but the recovery is advancing at different speeds and the “US recovery stands in between, with growth gathering momentum and inflation risks modest, but with unemployment still unacceptably high”.