Political Risk Latin America Blog @PolRiskLatam

Measuring Brazil’s economy: Statistics and lies

Posted in News and Articles, Political Risk by politicalrisklatam on March 18, 2011

by The Economist, March 10th, 2011.

Very big, but not the world’s fifth-largest economy quite yet

HE release of last year’s economic figures on March 3rd was cue for much crowing in Brazil. The economy grew by a blistering 7.5%, a rate unmatched since 1986. Since the currency started 2010 strong and ended it stronger, a GDP of 3.675 trillion reais converted at the year’s average exchange rate into $2.089 trillion. This meant that Brazil overtook Italy to rank as the world’s seventh-biggest economy (see chart). And income per head in Brazil has surpassed that in Mexico.

The president, Dilma Rousseff, welcomed the figures, but warned Brazilians not to expect a similar rise in 2011. Worried about overheating, her government is trimming 50 billion reais from this year’s budget. On March 2nd the Central Bank raised interest rates by half a percentage point for the second time this year. The aim is for growth to ease to a more manageable annual rate of 4.5-5%.

But her finance minister, Guido Mantega, could not resist a little boosterism. Brazil had grown fifth fastest of the G20 countries, he said, adding that, if its GDP were calculated taking into account purchasing power, it had overtaken Britain and France, too. Some of his listeners inferred that it had become the world’s fifth-biggest economy. (But the same trick bumps Russia and India up from tenth and 11th respectively to fourth and sixth, leaving Brazil seventh overall.) (continue reading... )



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