Brazil GDP growth was 7.5% last year and the government estimates an optimistic 4.5% growth this year. The investment community doesn’t seem  as positive though. London-based Capital Economics says “The current pattern of growth in Brazil is looking particularly unsustainable”. On the growth estimate:
“The firm has penciled in a meager 2.5-percent expansion for Brazil in 2013, believing that consumers have binged too much on credit. That is a shockingly low figure for a country that has become used to being ranked alongside China and India as the world’s hottest big emerging markets.”
Nomura’s Tony Volpon seems to agree by saying that “If you take away a strong labor market and you take away credit you basically get a different Brazil, a much lower growth Brazil”.
For him, Brazil is on course to return to more “boring” rates of growth — just 3.8 percent this year and 3.7 percent in 2012 — barring deeper reforms to improve Brazil’s business environment.
Volpon believes the job market may have entered bubble territory as companies chase scarce workers with higher salaries despite a gathering slowdown.
“Labour productivity is basically crashing in Brazil. Unless companies stop paying these crazy salaries … they are going to destroy their profitability,” he said.

Consumer confidence fell to a two-year low in June, according to a national industry index, and defaults on personal loans rose 22 percent in the first six months of the year, the biggest jump in nine years.
“You could argue that if the job market deteriorates a little bit those non-performing loans are going to go through the roof.”

Source here.

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