Brazil to surpass UK and Become World’s Sixth Economy by 2012
Reports from the International Monetary Fund and international private consultants show that at the end of the year Brazil’s GDP will rank sixth in the world and for the first time ahead of Britain’s GDP.
Brazil’s GDP is expected to grow 3.5% in 2011, less than originally expected by the government last January, but it will total US$ 2.44 trillion, enough to surpass the US$ 2.41 trillion from the United Kingdom.
The report was published by daily Folha de S. Paulo based on IMF data and the EIU, Economist Intelligence Unit and BMI, Business Monitor International.
“The fact that the Brazilian economy is overtaking that of the developed countries reflects the effects of the access of large segments of the poor population into the middle class and the consumer market,” said Robert Wood, a US analyst.
If the growth tendency in Brazil is confirmed in the coming years it is possible that it can overtake all European countries, including Germany by 2020, adds the report published by Folha.
With its advance in the global economic stage “Brazil tends to have a greater voice in international forums and it is equally important it prepares to adequately assume such a role,” said Rogelio Sobreira economist from the Brazilian Foundation and think tank Getúlio Vargas.
Interest Rates Cuts
Brazil’s central bank said slowing global growth will have a large enough disinflation impact and allow policy makers to carry out “moderate” cuts to interest rates.
The bank, in the minutes to its October 18-19 meeting, said it sees “declining risks” of missing its 4.5% inflation target next year. The inflation rate fell to 7.12% in mid-October, the first decline in 14 months, though it remains above the 6.5% upper limit of the government’s target range.
“Even with a moderate adjustment in the basic rate, the inflation rate in the relevant horizon is positioned near the 2012 goal,” the bank said in minutes. The report was published hours after European leaders agreed to expand a bailout fund to stem the region’s debt crisis, easing concern that the global economy is heading for recession.
Policy makers cut the benchmark interest rate a half point for a second straight meeting last week, to 11.5%, to protect Brazil from turmoil that has wiped more than US$ 6 trillion from world stock markets since the end of July.
The central bank published a “base scenario,” which assumes that the world economic turmoil has an impact on Brazil a quarter as strong as the 2008 crisis, allowing inflation to slow to 4.5% next year.
In the reference scenario, which assumes a benchmark interest rate of 12% and in the market scenario, which assumes that the central bank cuts its benchmark rate in line with economists’ forecasts, inflation will exceed the 4.5% goal next year, the minutes show.
