In his recent speeches, Brazilian finance minister Guido Mantega keeps reinforcing his optimism regarding the Brazilian economy. But behind closed doors, his team estimates 2012 GDP growth to be between 1.5% and 2% this year. This is, in fact, much below his latest official forecast of 3% and the Central Bank’s 2.5% projections.

“Most of our team use 3% as the target, but the chances to get there are dismal,” said one of his researchers.

In the document titled “Brazilian Economy in Perspective“, the economic team signals with the possibility of growing 4% in the last three months of the year. Though the economy has cooled much more than expected and many insiders favor a more “down to earth” approach in GDP forecasting.

“Growth in 2012 has already contracted significantly. Our real drama is next year’s GDP,” said another internal source.

According to Capital Economics, Brazil’s inability to deal with its structural problems – such as tax and labour inefficiencies and, especially, very high public spending for very little return – have always threatened not outright catastrophe but, rather, a failure to deliver on enormous potential. Still according to the research house, Brazil might lose 5 points of GDP growth in three years.

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4 Responses to Behind curtains, Brazil’s finance ministry team predicts GDP growth of 1.5% in 2012

  1. SALAZAR says:

    it may get 1.5% this year with all pumping of credit but the reversal will be painful with negative rates for years. china, europe problems are at the very beginning. the importation of gas and diesel may bring back the oil crises of the 70s. No new refining capacity is in sight for several years.

  2. FOR CRYING OUT LOUD…. How can they FORECAST A GROWTH OF 3% or 4% in the last sin months of this year while the entire GLOBE and that includes US (BRAZIL) is walking on thin ICE! Have I missed something here. Please, give me a break!

    I can kind of understand that Public Figures are always trying to give comfort and pass an optimistic message to the MASSES besides their main occupation of looking good + being at the right places to get REQUIRED MEDIA ATTENTION.

    They don’t stop amazing me!

    CONFESSION: I wish I was a FLY! For real! If so, I would be flying around their offices, listening what they have to say, having a close look on how plans and forecasts are built and close enough to find out the truth. I wish I could see how they get these MAGIC figures together.

    What I admire the most with government leaders is their ability – and license – to answer questions empty. Mere mortals have to answer questions in a direct manner and often substantiate their opinions with content.

    The law only applies for mere mortals! Putting it mildly, burning somebody else’s money – READ the taxpayers Money – has never been nor will be a problem. That is universal in most of countries today and Brazil is following the trend.

    Digging into PUBLIC funds – Not their OWN POCKETS – is easy and fine! It doesn’t hurt, and even if does hurt the country and the public in general it doesn’t affect the personal lives of the ones engaged on the decision process. In fact, monetary or economic policies are experiment of sorts.

    When and If it works, they will be praised for; if it doesn’t they act fast to blame third parties or elsewhere and try something else. In essence, there is little or nothing to lose. And… Being good politicians, they have the gift of twisting words and always manage to find an excuse for problems and mistakes.

    Another great quality our government leaders have is their memory capacity. Honestly whenever I watch the Dog Whisperer Program at Discovery I think of them.

    With all due respect their memory is similar to the memories of troubled dogs being trained by Cesar Milan Dog being trained by the Dog Whisperer. They live now and only now. Whatever happened yesterday or whatever will happen tomorrow doesn’t really matter, does it? Whatever has been said today are nothing more than words.

    As long as we have a system where politicians are left unpunished for their deeds, we will have the system we have. Brazil is not an exception. It is a country with massive resources, with capacity, but with a very poor mentality.

    Entrepreneurs think in their majority about their own pocket and short term Take as much as possible today as long as it last, because they never know how long it will last. In fact, not wrong, if we look at our history. However, to see changes, a change in Mentality across the board is required.

    Brazil grew due to the VAST AMOUNTS OF RESOURCES. As any starting of trend, the jump was remarkable. Now that we have pass that phase, we must enter the second stage. Managing. Here is when the situation gets a bit more complex. Only time will tell.

    I remember my late father saying that he would never see real changes in mentality in our country during his life time. He didn’t ! And I guess, unless things really change, I will not see these changes in my life either.

  3. SALAZAR says:


  4. cat says:

    Brazil is different from the rest of world…they will sell commodities to ALIENS FROM OTHER PLANETS and this crisis will be MAROLINHA only in brazil… or maybe its the PORTUGUESE fault … Portuguese left hundreds of years ago but maybe we must blame then for everything bad that happens in brazil.

    Thats what i call a HARD LANDING… from 7% to 1.5% in couple of years.

    For the records … Made In Brazil.

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