Brazil’s growth slowest in three years

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BRASILIA, BRAZIL- The Brazilian economy grew at it’s slowest pace in three years. Gross Domestic Product (GDP) grew only 0.9% this past year, according to the Brazilian Institute of Geography and Statistics (IBGE).

At the beginning of the year, government was expecting a much higher 4.5% growth. Most of the economy’s growth was seen in the last three months of 2012, where there was a 0.6% growth.

This growth is pittance compared to Brazil’s growth in 2011, where it grew 2.7% and took it’s place as the world’s sixth biggest economy, overcoming the United Kingdom in the process.

President Dilma Rousseff has been trying to stimulate the slowing economy with tax cuts and lowered interest rates, although these measures had little effect in the past year.

Due to 2012 figures, Brazil has now fallen behind the United Kingdom the seventh place once more.

“For Brazil, the issue is that consumer spending, which for years was the driver of growth, can no longer continue to increase at rapid rates.” Mark Williams of Capitol Economics stated. “Brazilian households spend roughly a fifth of their income servicing debt—far more than over-leveraged US households did before the financial crisis. This debt burden has understandably started to take a toll on the spending.”

 

By: Julia Roake

Source: BBC

01 March 2013

08:15am PDT

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