After Having Been World’s 8th Largest Economy Brazil Is Celebrating a 14th Place

Mexico has a larger economy than Brazil according to World BankBrazil gained one position in the ranking of world economies. In the opinion of specialists this improves the country’s image abroad and improves the chances of attracting foreign investments.

According to information released last week by the World Bank, Brazil went up from the 15th position amongst the greatest economies in the world in 2003, to the 14th last year, when the Gross Domestic Product (GDP) reached US$ 604.8 billion.

“From the point of view of the entrepreneur who is abroad, this is a positive fact,” said the Arab Brazilian Chamber of Commerce (CCAB) president, Antonio Sarkis Jr.

“When we speak of developing countries, since the investor has little information, he looks a lot at the GDP, which demonstrates the capacity the country will have to ‘return’ the investment,” added Alex Agostini, economist from the consulting company GRC Visão.

Agostini recalled that Brazil competes directly with other developing countries to attract foreign direct investment.

The executive director at the Institute for Studies in aid of Industrial Development (Iedi), Julio Gomes de Almeida, added that the improvement in the ranking “brings the country to the surface”.

In this sense, it is important for the country to constantly get closer to other emerging nations that are ahead in the ranking, as is the case with Mexico, which is in the 12th position, South Korea (11th) and India (10th).

And this should indeed happen, in the opinion of the specialists. Maybe not yet this year, but certainly in the medium term.

“The tendency is for Brazil to move up in the ranking, to reach, and even surpass, countries such as Mexico, Korea and India. Brazil could easily reach the 10th position,” affirmed Almeida.

“Brazil is in condition to carry on striding positions, but it is necessary to have a few years of continuous growth,” said Sarkis, adding that with a favorable growth rate, in four or five years Brazil may go back to the position occupied in 1998, of the 8th economy of the world, before the devaluation of the Brazilian currency, the real, against the United States dollar, in 1999.

Factors

The exchange rate, which contributed to Brazil’s fall in the ranking in the previous years, this time helped raise the country’s position.

This is due to a strong appreciation of the real against the dollar in recent months, making the Brazilian GDP rise in dollar values. It is considering this figure that the World Bank publishes its list.

More than that, however, the main factor making the country rise one position was the growth of the country economy last year, 5,2%.

“The situation was very favorable as Brazil had the greatest growth rate in the last 10 years,” stated Agostini.

“If the country grew at this rate every year, our position in the ranking would certainly be much better,” added Almeida.

“But this is no reason for great commemoration,” alerted Agostini. This is because, in the evaluation of specialists, the rate of growth of the Brazilian economy this year should be below that of last year, between 3% and 3.5%. In the meantime, the average of growth of other developing countries should be 6%.

To Agostini, “economic equilibrium is not enough.” Investment of between 25% and 30% of the country GDP is necessary, mainly in the area of infrastructure.

“Planning is necessary,” added Almeida, pointing out that Brazil’s benchmark interest rate at around 20% helps reduce development.

This article appeared originally in ANBA – www.anba.com.br

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