From 1998 to 2003, Brazil fell from the
8th to the 12th position
among the richest countries in the
world. In this short
period, the country was passed by Canada and Spain (1999),
Mexico (2001), and
South Korea (2002). Now, the Netherlands,
Australia and India are also ahead in the ranking.
Once upon a time there was a promising land south of the Equator, which was the world’s eighth largest economy
and going up. That was Brazil, a mere five years ago. Today, the country is in
12th place, but not for long. A study released
by the consulting firm Global Invest puts Brazil in
15th position, with the Netherlands, Australia and India on the fast lane
passing the slow-moving Brazil. Brazil is expected to have a GDP (Gross Domestic Product) of US$ 467 billion, by year’s end.
In 1998, with a US$ 799 billion GDP, Brazil ranked
8th among the largest economies in the world. Since then, the
country in 1999 was passed by Canada and Spain; in 2001 by Mexico and in 2002 by South Korea. How to explain this free
fall? Alexsandro Agostini, one of the authors of the Global Invest study, blames Brazil’s low-rate growth in the last five
years (1.49 percent) and the sharp devaluation of the real against the dollar (60 percent).
The Brazilian Central Bank announced October 1 that this year the country’s GDP, the sum of riches produced by a
nation, would be growing only 0.6 percent instead of the 1.5 percent predicted earlier. The country’s GDP for the first semester
was R$ 711 billion (US$ 245 billion), according to the IBGE (Brazilian Institute of Geography and Statistics).
The Brazilian government says that a 1.6 percent downturn in the economy, in the second quarter, is the main reason
for this poor showing. The same Central Bank report also estimated that Brazil’s inflation for this year will be 8.9 percent.
Market estimates for the inflation rate are a little higher: 9.65 percent.
The bank was able to see a silver lining in the dismal picture, pointing that inflation remained low due to the
administration’s restraint in fiscal and monetary control. That, in turn, made it possible for the Central Bank to lower the Selic (Brazil’s
key interest rate) from an annual rate of 26.5 percent to 20 percent. Estimates for next year’s inflation is 3.9 percent.
The weight of Brazil among the world’s 15 largest GDPs was cut in half in the past five years declining from 3.3
percent in 1998 to 1.7 percent, this year. That same period, the U.S. , the world’s largest economy, saw its wealth grow from
US$ 8.7 trillion to US$ 10.9 trillion. China, which was able to keep its
7th place since 1998, grew a whole Brazil GDP,
during that time frame.
In order to get back to the world’s top-ten economies roll, Brazil would need to grow at an annual rate of 3.5 percent
and see the real strengthening its value against the dollar. That shouldn’t be happening in the near future, according to
Agostini: "In 2003, the scenario allows us to project a meager growth in the economy, something insufficient to join other
countries’ performance." Some experts, however, believe that Brazil’s economy has hit bottom and that next year it will be
growing at a 3 percent rate.
Year 2003 Ranking in US$ billions
1. United States – 10.902
2. Japan – 4.351
3. Germany – 2.394
4. United Kingdom – 1.764
5. France – 1.742
6. Italy – 1.453
7. China – 1.346
8. Canada – 825
9. Spain – 802
10. Mexico – 587
11. South Korea – 520
12. Netherlands – 514
13. Australia – 513
14. India – 509
15. Brazil – 467