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Bigger than Thought: Brazil as the World's 8th Economy
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| Lira |
Is it a prelude to a BRIC future?
Also, I find it weird that we're the 8th economy, yet we're considered poor. What the hell is going on here!? :p
| quote: | Brazil's economy
Bigger than thought
Mar 22nd 2007 | SÃO PAULO
From The Economist print edition
An underestimated pay-off from economic reform
WHEN it comes to economic growth, Brazil has long been seen as something of a laggard. But it turns out that the country's economy in 2005 was 10.9% bigger than previously thought and has grown since 2000 at an annual average rate of 3%, rather than 2.6%. That still lags the world (see chart) but is a bit more respectable.
So, at least, reckons the government's statistics institute, IBGE. It has redone its sums, relying more on data from annual surveys and less on dubious rules of thumb. In particular, it now thinks that services account for 64% of GDP, rather than 54%.
A bigger number for the economy changes several important ratios. ABN AMRO, a bank, reckons that net public debt was probably 45% of GDP last year rather than 50%, which may help Brazil's credit rating. The notoriously onerous tax burden was slightly lighter than it seemed: in 2003 taxes claimed 32% of GDP rather than 34%.
But the problem of under-investment looks more pronounced. Gross spending on fixed capital was just 16.3% of GDP in 2005, compared with an earlier estimate of 19.9%. Investment may be more productive—spending on machines and equipment rose as a share of GDP while construction fell—but the overall rate is still too low to produce tigerish growth.
There are other reasons to think that Brazil is better off than generally realised. In a recent paper*, two IMF economists argue that official data “grossly underestimate” the growth of household income. Brazil's economic opening in the early 1990s lowered prices and improved the quality and availability of goods, changes that were largely missed by the consumer-price index. Using data about what people actually consumed, the economists estimate that income per head grew 4½% a year between 1987 and 2002 compared with the official figure of 1½%, with the poor benefiting most. That makes Brazil look better; it makes economic reform look better, too. |
http://www.economist.com/world/la/d...tory_id=8892834
| quote: | UPDATE 3-Brazil benchmarks set to change on GDP revision
Wed Mar 21, 2007 5:17PM EDT
(Recasts, adds forecasts from finance minister)
SAO PAULO, March 21 (Reuters) - Brazil's statistics agency
broadened its methodology for calculating economic growth to
bring it in line with international standards, a shift that
could make several macroeconomic benchmarks tracked by
investors look better.
Brazil's economy, Latin America's largest, grew more than
previously estimated between 2002 and 2005 under the new
calculation that adds in more segments of the economy, the
government said on Wednesday. The change in methodology was the
most substantial revision in decades.
The national statistics agency IBGE revised all gross
domestic product figures back to 2000. It expects to release
new estimates for economic expansion in 2006 and some earlier
years by the end of this year.
The new methodology will also lower calculations of several
other economic indicators including the primary budget surplus,
the nominal budget deficit, the government's debt-to-GDP ratio,
the tax burden and the current account surplus as a percentage
of GDP.
The new methodology takes into consideration 56 segments of
the economy and 110 products, up from 43 segments and 80
products before, the IBGE said.
It "is broader and therefore better suited to evaluate the
Brazilian economy," said Giovanna Rocca, an economist at
Unibanco in Sao Paulo.
The IBGE said the biggest change in the new GDP data
involves Brazil's services sector, which will contribute to
66.7 percent of the economy from 56.3 percent before. The new
methodology will also affect the weight of Brazil's industry in
the economy, which falls to 27.7 percent of GDP from 36.1
percent before. The agriculture sector fell to 5.6 percent of
GDP from 7.7 percent before.
The revised data could lead policy-makers to conclude that
free-market reforms implemented during the last two decades
have been more effective at boosting growth than was believed,
economists have said.
Under the new methodology, Finance Minister Guido Mantega
said the economy could grow more than 4.5 percent in 2007,
compared with market forecasts of about 3.5 percent.
He also said that growth in 2006 could be revised to
between 3.3 percent and 3.5 percent from a previously reported
2.9 percent. He added that the government's budget deficit
could narrow to zero and that its debt-to-GDP ratio could drop
to 40 percent by 2010 from about 50 percent now.
Mantega said the revised data from 2005 would boost
Brazil's ranking among the world's largest economies to eighth
from ninth.
"Now it's G8 with Brazil included," he told reporters in
Brasilia.
Following is a table summarizing the revisions:
BRAZIL GDP GROWTH
REVISED OLD ESTIMATE
2005 2.9 PCT 2.3 PCT
2004 5.7 PCT 4.9 PCT
2003 1.1 PCT 0.5 PCT
2002 2.7 PCT 1.9 PCT
2001 1.3 PCT 1.3 PCT
2000 4.3 PCT 4.4 PCT
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http://www.reuters.com/article/bond...141693420070321
| quote: | Brazil may raise economic growth forecasts, Finance Minister says
The Associated Press
Wednesday, March 21, 2007
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SAO PAULO, Brazil: Finance Minister Guido Mantega said Wednesday that Brazil may raise its 2007 economic growth projections following the positive revision of figures for 2002 through 2005.
The government's official forecast for 2007 gross domestic product growth currently stands at 4.5 percent, although market surveys have placed the figure at 3.5 percent. But Mantega said the GDP could grow more than originally expected.
"It will be easier to reach a 5 percent GDP growth in 2007," Mantega told reporters in Sao Paulo.
The Brazilian Census Bureau, or IBGE, on Wednesday said it had adjusted its methodology for measuring GDP growth to better reflect activity in the informal sector and the growing importance of technology and financial services in the economy, among other factors.
For 2005, the IBGE's new methodology raised GDP to 2.9 percent from 2.3 percent. For 2004, the IBGE increased GDP growth to 5.7 percent from 4.9 percent. For 2003, the new figure was 1.1 percent, up from 0.5 percent, while for 2002 the new figure was 2.7 percent, up from 1.9 percent.
Mantega said that as a result of the new methodology, GDP in 2006 could be revised to as high as 3.5 percent from the current estimate of 2.9 percent.
The IBGE has promised a revised 2006 figure in the coming weeks, and Mantega said the government will revise its estimates for 2007 growth after last year's figures are announced.
Alexandro Agostini, chief economist at the Austin Rating consultancy in Sao Paulo, said he did not believe that the IBGE tinkered with GDP statistics to improve the image of the government of President Luiz Inacio Lula da Silva, Brazil's first elected leftist president, who took office in 2003.
"Services have a greater weight under the new methodology, and they happen to have grown more in recent years," he said. Financial services especially enjoyed a boom from 2003 onward due to increased lending and record bank profits, he said. |
http://www.iht.com/articles/ap/2007...omic-Growth.php |
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| LazFX |
and I was telling my bud Tarek from Rio to start investing in the Brazilian Markets.....while the iron is hot; I say :) and that is no lie....
Cause My Broker is E.F. Hutton and E.F. Hutton says....................
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| malek |
| well brazil is still very poor, you have to look at it on a per capita basis and at the distribution of incomes. (very very rich people and very very poor people...). |
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