Brazil's economy grew by 0.3% in the fourth quarter of 2011 and expanded by a total of 2.7% last year. That was far lower than 2010's 7.2%, but still enough to eclipse Britain to become the world's sixth-biggest economy. Brazil's output reached $2.47trn last year, compared to $2.42trn in Britain.
What the commentators said
Brazil has shaken off hyperinflation and become one of the world's "most economically vibrant countries", said Mark Mobius of Templeton Investments. It boasts a wide range of commodities, encouraging demographics and a strong domestic consumer sector. Deregulation, privatisation and improved economic management all helped lower inflation, curb debt and boost growth. Chinese demand for raw materials over the past decade has also contributed. Growth is expected to accelerate this year.
But while the big picture is encouraging, the shorter-term outlook is more uncertain. The recovery in global risk appetite this year and high local real interest rates, have propelled the currency, the real, up 9% against the dollar this year. That has dented industry, while ageing infrastructure and a shortage of skilled labour aren't helping either, according to Robson Andrade of the National Industry Confederation.
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Alberto Ramos of Goldman Sachs points to capacity constraints that he reckons will re-ignite inflation when growth accelerates. Household balance sheets look stretched, adds Capital Economics, while a renewed slide in global growth would prompt capital to flee emerging assets. Last year's third quarter "showed how quickly" this can hit growth. In short, "hopes of a return to growth rates of 5%+ look optimistic".
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