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Brazil’s Economy, Now Larger than UK, Enjoys Accelerating Growth

Brazil property imageData just published for November Brazil’s economy grew at its fastest rate for 19  months, ending a 3 month decline. This was partly helped by a recovery in consumer confidence, as increased spending helped the world’s second largest emerging market return to growth, even as global markets showed signs of slowing.

Seasonally adjusted figures show economic activity increased by 1.15% in November compared to October, whereas experts had been forecasting a gain of just 0.9%.  This follows December’s report by the Centre for Economic and Business Research saying that Brazil’s economy is now larger than that of the UK, as the sixth largest in the world.

Brazilian domestic spending is being helped by lower interest rates, as well as measures designed to cut taxes and boost credit and generally stimulate the economy. Analysts think the central bank will cut borrowing costs still further and are predicting them to fall to 10% by May.

In the three months preceding November economic activity declined, making this the longest period of contraction seen by the country since the Lehman Bros went bankrupt in 2008. It was the first time the country had seen economic contraction in over two years — industrial output has also fallen for five out of the last eight months.

Interest rates have now been cut three times since August. What’s more the government has lowered taxes on consumer goods and eased credit restrictions, in an effort to try to protect the country from the European debt crisis. People have responded by spending more, as retail sales increased by 1.3% in November — the fastest rate in 15 months. Growth for Brazil is predicted to be 3.27% this year, with growth for 2013 predicted to be 4.2%.

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