News Column

Brazilian Growth Falls: Cohen Column

Dec. 4, 2012

Isaac Cohen --

National Congress in Brasilia, Brazil
National Congress in Brasilia, Brazil

The government revealed last week that Brazil's third-quarter economic growth amounted to only 0.6 percent from the previous quarter. This led to a reduction to 1 percent of the growth projection for this year.

In 2010, the Brazilian economy grew spectacularly, at a rate of 7.5 percent, mainly based on commodity exports to China, which has become Brazil's main export market. However, with the slowdown in China, the recession in Europe, almost no growth in Japan and the slow U.S. recovery, in 2011 Brazilian economic growth fell to less than 3 percent. Also, Argentina, which is Brazil's main trading partner within MERCOSUR, is experiencing a steep fall in economic growth, from 9 percent in 2011 to less than 2 percent this year.

Former Minister of Finance of Brazil Antonio Delfim Netto, quoted in The New York Times, called the fall in economic growth "a tragedy." Exports have weakened and imports have fallen steeply. This indicates a need to review existing trade policy, mainly based on commodity exports.

It is necessary to emphasize also that trade with the U.S is the main market for Brazilian manufacturers. The potential of trade with the U.S. can be illustrated by observing that Brazil's exports to that market in 2011 amounted to $31.4 billion, slightly above the $28.7 billion exported to the U.S. in the same year by Central America and the Dominican Republic.

Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Español TV and radio, and a former director, UNECLAC Washington Office.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: (c) 2012. All rights reserved.

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters