The Brazilian GDP grew a meager 0.5% in the second quarter threatening do derail the economic targets established by the Lula administration. The new number was announced today, August 31, by the Brazilian Institute of Geography and Statistics.
The government is still betting the economy will grow 4%, but analysts believe the GDP will not be more than 3.5%. Earlier this year, former Finance Minister Antonio Palocci was promising a 4.9% expansion, the same as in 2004.
Why the slow growth? The main cause seems to be the economy’s worse than expected performance. Commerce also wasn’t that bright. The government blames the poor showing on strikes, high number of holidays and all the breaks Brazilian took to watch the Seleção playing in the World Cup in Germany.
Industry was the sector with the worst performance, falling 0.3% between April and June. The best sector, the agricultural one, had a 0.8% growth. Services also expanded, but a little less: 0.6%.
Even after the IBGE announcement, Finance Minister Guido Mantega reaffirmed that he still hopes the economy will grow 4% this year. President Lula downplayed the importance of the low number saying:
"There are insensitive people who often can only see an action through some numbers of macroeconomics and do not realize that a nation is made up by men, women, children and the elderly, with a different perspective on what is going on."