2006 Brazilian GDP Downgraded to 2.74%

The latest release from the Brazilian Central Bank, based on private sector estimates, downgraded to 2.74% the 2006 GDP expansion. For 2007 the estimate among a hundred leading business men and analysts is that the economy will grow 3.5%.

Last Monday, President Lula da Silva on taking office for a second four year mandate promised to "unleash" Brazilian growth which is the lowest among the leading emerging countries

Inflation for 2006 was estimated in 3.11% and 4% for 2007, while the official Central Bank target is 4.5%. Private analysts also estimate that the basic lending rate in Brazil, Selic, currently at 13.25% should keep dropping to 12.31% next December.

Trade surplus in 2007 is expected to reach US$ 38 billion while the current account surplus in 2006 was US$ 13 billion and is estimated in US$ 6 billion for 2007.

Direct foreign investment in Brazil in 2006 was US$ 16 billion and should remain in the range of US$ 16.1 billion in 2007.

In 2006, Brazil had a record US$ 46 billion trade surplus, with exports reaching US$ 137.4 billion and imports US$ 91.4 billion. The 2006 surplus is 2.8% higher than the US$ 44.7 billion of 2005. Exports jumped 16.2% over 2005 and imports 24.2%.

The strong boost in imports is attributed to the strong real, which appreciated 8.1% against the US dollar.

However Brazilian exporters are pressing the Lula administration for strong measures to prevent the real from continuing its appreciation spree. The exports’ goal for 2007 is US$ 143.5 billion.

But in spite of the currency debate, strong demand from a world economy plus higher values for minerals and commodities have helped boost exports.



  • Show Comments (4)

  • ch.c.

    oops…typing mistake….
    should read :
    borrowing rates by SME not…from…

  • ch.c.

    To Rob
    The Selic rate is like the U.S. Discount rate, therefore Scott is right !

    But…..borrowing rates from SME is around 40-45 %, Individuals borrow at around
    60 %, overdraft rate is at well over 100 % !

    I have the precise government stats…if you wish !

    In Brazil… creditst is fun….when you buy 1 you pay for 2….or 3.
    Is that not great…when inflation is below 4 % ????????

    And contrary to what the article say, Brazil has not the lowest economic growth of the leading emerging countries….but the lowest of of ALL world developing countries.

    Worse, within LATAM/Caribean countries, Brazil is the second worst…after Haiti, not even a developing country but a LDC.

    Still worse, this is the second consecutive year.

    Nonetheless, Lula, at the end of 2005, guaranteed…yessssss guaranteed that 2006 will have a growth rate of 5 % ! Laugh !
    Sadly enough…..he gave instructions to his ministers, right after the recent elections,
    to do whatever is necessary that 2007 will have a growth of 5 % !!!! Laugh….!!!!

    The reality is that Brazil grew at the rate of 2,5 % during the first mandate of Lula.

    WORSE THERE IS NOT knowing that during the last 4 years, most developing countries grew at a rate 2, 3 and even 4 times as much !

    Stupid question to Brazilians : with such a low growth rate how do you expect to fill or reduce the gap with wealthier countries ? You simply dont and wont. But countries poorer than Brazil are filling the gap quite fast….. with Brazil. Simple maths.

  • Scott

    No, both figures are annualized rates.

  • Rob

    Monthly vs Yearly
    When Brazil says the basic lending rate is 13.25%, this is monthly, correct? So the annual rate is really 159%

    The US is a monthly rate of 0.41% or about 5% per year. Is this really correct?

    This is a huge factor in why there is slow growth.

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