Brazil’s finance minister launches spirited defense of economy following third quarter GDP slump, insisting rebound ahead
Brazil’s economy is set to return to growth in the fourth quarter and continue that way in 2014, finance minister Guido Mantega said on Tuesday.
His defense of the country’s growth trajectory comes as the country reported a fall in output, of 50 basis points, in the third quarter.
Mantega pointed to year on year growth of 2.2%. An upward revision of second quarter growth figures made it harder for the country to post growth in the third quarter, he added.
“The trend for Brazil’s economic indicators for the fourth quarter point to higher growth rates than have been seen for the third quarter,” Mantega said Tuesday. “Consumption is increasing and is expected to perform better than in Q3. Industry will also show better results in the next quarter. Thus, Brazil’s growth rate for 2013 is expected to remain within expectations by the market and many analysts.”
Analysts at Capital Economics in London said Tuesday that the numbers “dashed hopes” that Brazil’s economy was rebalancing.
“After showing promising signs of rebalancing away from consumption and towards investment in the first half of this year, the expenditure breakdown revealed that the economy returned to some old bad habits in the third quarter,” they said.
Mantega refuted the claims in a discussion with reporters on Tuesday, Investment had grown faster than consumption in the past four quarters, compared tot he previous period, he said.
“Investment in those quarters increased by 3.7%, while family consumption increased by 2.8%”, he said.
“This year we see investment is growing at a faster rate than consumption. We have a scarcity of credit lines for consumers. We have credit available for investors but not for consumers. Consumers are being more moderate, and looking at real estate, rather than durable goods.
“There’s a rebalancing happening in our economy where investment is overtaking consumption as main driver for growth.”
The country was targeting a long term growth rate of 4%, and investment in infrastructure – to pick up as more concessions come online in 2014 – would help reach this target, Mantega said.
–Courtesy of Latin Finance