Brazilian economy holds steady
In a positive sign for investors, economic growth in Brazil is again looking steady. Brazilian GDP levelled at growth of 0.9 per cent in 2012, according to the Brazilian Institute of Geography and Statistics (IBGE). This follows growth of 2.7 per cent in 2011 when the country overtook the UK to become the sixth-largest economy in the world.
We were expecting a slightly higher level of growth last year given the 4.5 per cent expansion prediction that came at the start of the year. But in the long run a steady rate of growth should be more beneficial to investors and the country as a whole; giving Brazil time to consolidate its infrastructure following a fast period of expansion.
Mark Williams of Capital Economics spoke to the BBC about the situation: “For Brazil, the issue is that consumer spending, which for years was the driver of growth, can no longer continue to increase at rapid rates.
“Brazilian households spend roughly a fifth of their income servicing debt - far more than over-leveraged US households did before the financial crisis. This debt burden has understandably started to take a toll on their spending.”
But to give us a bit of solid confidence in the economy’s return to growth, Brazil has also posted some good industrial stats this week. The country’s industrial production figures grew by 2.5 per cent month-on-month. Capital goods were leading the way with an 8.2 per cent gain over the month, compared to a 0.1 per cent contraction in December.
These economic and industrial improvements are continuing to feed demand down to our plantations where we’re poised to meet the ongoing need for sustainable resources in Brazil and abroad.
