Brazil’s economy stalled in 2014, growing just 0.1 percent relative to the previous year, the IBGE statistics agency said last Friday.The result came as a relief for the government considering projections for a contraction in Brazil’s gross domestic product for 2014 and forecasts for a 0.83 percent decline in GDP for this year.
The IBGE also released revised GDP data showing that Brazil’s economy grew 2.7 percent in 2013. The economy expanded just 1 percent in 2012.
Brazil’s economy grew a surprising 0.3 percent in the fourth quarter compared to the previous three-month period but contracted 0.2 percent compared to the final three months of 2014.
The year-over-year quarterly result, however, was better than that of the third quarter, when the economy shrank 0.6 percent relative to July-September 2014.
Economic stagnation in 2014 was mainly due to a 1.2 percent contraction in industrial output, since agricultural production grew 0.4 percent and the services sector expanded by 0.7 percent.
The disappointing industrial performance was primarily due to a 3.8 percent decline in factory output, primarily caused by a contraction in the automotive sector.
But the industrial contraction was offset by growth of 8.7 percent in the mining sector, mainly driven by higher production of crude, natural gas and iron-ore.The lackluster economic performance last year also was caused by a 4.4 percent drop in productive investment, the IBGE said.
Household consumption, which for many years was the chief driver of Brazilian economic growth, grew just 0.9 percent in 2014 after expanding 2.9 percent in 2013.
Brazil’s low growth rates since President Dilma Rousseff first took office – 3.9 percent in 2011, 1 percent in 2012, 2.7 percent in 2013 and 0.1 percent last year – contrast with the strong growth of 7.6 percent in 2010, the final year in office of her mentor and predecessor, Luiz Inacio Lula da Silva.
Private-sector economists are forecasting an 0.83 percent contraction in 2015 due in part to a commitment to austerity by Rousseff and new Finance Minister Joaquim Levy. The Central Bank is projecting that the nation’s gross domestic product will decline by 0.5 percent.
Rousseff, who was narrowly re-elected to a second four-year term in October, is committed to getting Brazil’s financial house in order – via spending cuts and the rolling back of tax breaks – after federal, state and local governments ended 2014 with a cumulative primary budget deficit equivalent to $12.51 billion.
Meanwhile, annual inflation in February rose to 7.7 percent, its highest level in a decade, and the real has depreciated by more than 20 percent against the dollar since the start of 2015.
Source | Latin American Herald Tribune