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Low Dollar and High Interests Reduces Brazil’s GDP to 2.5%

Brazil’s National Industrial Confederation (CNI) has just announced a reduction in its estimate for GDP growth this year from 3.5% to 2.5%.

"Throughout the year the strength of the economy has been weakening. We are about to close out 2005 with less growth than we had last year. Growth will be around 2.5%," explained Paulo Mol, a CNI economist.

The CNI also announced downward revisions of its estimates for the industrial sector as a whole (4.4% to 3%) and the manufacturing sector (4% to 2%).

Mol declared that a nasty combination of high interest rates and the valorization of the local currency (the real) against the dollar had a negative influence over the last 12 months.

"This works against investments," he said, adding that something has to change so 2006 will be better.



  • Show Comments (2)

  • Guest

    john day. john.day@terra.com.br
    could not agrre more and will add tha the internal debt as well as the almost total collapse of infrastruture will eventually leave investors stupid enough to buy into the brazilizn economic miracle holding the bag.again.

  • Guest


    The dollar is strong against ALL major currencies.

    IT IS THE REAIS THAT IS STRONG AGAINST ALL THE WORLD CURRENCIES, simply due to your stupid high interest rates. Therefore short term investors (locals and foreigners) and speculators are profiting….from your stupid monetary policies, by investing at high rates with no risk !!!!!!

    No doubt that time will come in a not too distant future, they will leave your currency as fast as they bought it.

    You will then complain again but for the exact opposite reasons.

    You did it for the last…..50 years !
    No reason to change, so far.

    Even, from 1998 to 2002, 150 billions Reais was money laundered outside of your country by brazilians themselves.
    Despite being illegal, very few went to jail.
    Therefore, now you say, your currency strength works against investments and when your currency was weak you said exactly the same.
    Quite contradictory, as usual, from brazilian government leaders.

    Reality is that your problems are the stupid interest rates you give to short term investors or speculators. But Meireles and Lula both agree of the actual selic rate policy.

    Up to you to decide, but so far you do wrong things and then complain that the reasons are from outside, not inside.

    You have the same attitude for Agriculture, Industrial goods and services with the WTO.

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