Economy Brazil economy grows 0.1 percent in 2014, beating predictions

Brazil economy grows 0.1 percent in 2014, beating predictions

 

Database image. Database. Brazilian Institute of Geography and Statistics IBGE
Database image. Database. Brazilian Institute of Geography and Statistics IBGE

(AA) — Brazil’s economy grew 0.1 percent in 2014, according to official figures released Friday, narrowly avoiding a contraction predicted by economists.

It is the worst GDP performance figures since 2009, the government’s official statistics agency, the Brazilian Institute of Geography and Statistics (IBGE) said as it released fourth quarter and year-end results for 2014. 

The economy expanded 0.3 percent between October and December, with agribusiness and services sectors performing strongly, staving off a negative year-end total.

A significant fall in investments throughout 2014, however, down 4.4 percent amid a climate of economic and political uncertainty, had a major effect on the figures. Industry also slumped 1.2 percent, with many areas suffering significant layoffs.

Brazil’s central bank had expected the economy to shrink around 0.1 percent, a forecast echoed by many economists.

The IBGE has also now altered its calculations, including new data, to bring GDP results in line with methodology recommended by institutions such as the World Bank and the United Nations.

Revised figures showed the economy bounced back to 7.6 percent in 2010, and not the 7.5 percent previously announced. In 2013, the economy expanded by 2.7 percent, up from 2.5 percent. 

In 2009, the worst performance in recent history, the Brazilian economy shrank 0.2 percent amid a global economic downturn.

But economists believe 2015 will see a stronger contraction of about 0.8 percent, according to a recent central bank survey. 

Finance Minister Joaquim Levy is pushing ahead with unpopular austerity measures in a bid to bring back loong-term sustained growth.

He has admitted 2015 will see the economy deteriorate before it improves, as the measures take hold. 

The markets had demanded the adjustments in fiscal policy in order for Brazil to secure greater confidence from outside investors. Credit ratings agency Standard & Poor’s recently recognized the efforts by maintaining Brazil at investment grade, despite previous threats to downgrade Latin America’s biggest economy to “junk” territory. 

The government of President Dilma Rousseff is also keenly aware of the effects severe cuts to public spending could have on the population, particularly the poorer sections that have traditionally aligned with her center-left Workers’ Party.

Angry with the state of the economy and rampant government corruption, hundreds of thousands of Brazilians recently took to the streets to demand Rousseff be imepached and the removal of her ruling coalition.

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