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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