Brazil Economic Forecast

Brazil is the 8th largest economy in the world. It is also the largest economy in the Latin America. Brazil is also one of the four BRIC countries, a term coined in 2001 by Goldman Sachs, referring to the the big four emerging markets of the world.

Brazil is the 8th largest economy in the world. It is also the largest economy in the Latin America. Brazil is also one of the four BRIC countries, a term coined in 2001 by Goldman Sachs, referring to the the big four emerging markets of the world.

Since 2003, Brazil has developed many of its industries, including the agricultural, mining, manufacturing and services sector. Brazil has been steadily expanding its economy and has recorded a growth rate of 4.2 percent annually from 2003 to 2008. Even though GDP (PPP) growth slowed down during the global financial crisis in 2008, Brazil is one of the first countries to step up of the crisis, the worst since 1930s.

As the host nation of the FIFA World Cup in 2014 and the Olympics in 2016, Brazil is expected to invest heavily in new infrastructure, and this present great opportunities for exporters and investors in Brazil over the next 5 to 7 years.

Brazil’s GDP Forecast

Brazil is the 8th largest economy in the world according to GDP (PPP) and the 7th in the world according to GDP (Current Prices, US Dollars). In 2010, Brazil’s GDP (PPP) was US$2.172 trillion and GDP (Current Prices, US Dollars) was US$2.090 trillion. Brazil’s economy is expected to grow by 5.60 percent in 2011, posting a GDP (PPP) of US$2.293 trillion. The economy will continue to expand at a rate of 5.5 to 6.0 percent over the next 5 years, to hit US$3.030 trillion in 2016.

The GDP (PPP) per capita of Brazil in 2010 is US$11,239.47. This figure is 7.52 percent more than that in 2009. GDP (PPP) per capita is expected to increaase by 4.69 percent in 2011, to US$11,767.16. Brazil’s GDP (PPP) is expected to grow by 4.64 to 6.04 percent from 2012, hitting US$15,193.35 by 2016.

While the economy is growing at a steady rate of over 5.5 percent, experts warns of inflationary pressures and formation of asset bubbles in Brazil. The central bank of Brazil has raised interest rate to 11.75 percent in the second quarter of 2011 to curb inflation.

Brazil’s Unemployment Forecast

Brazil’s unemployment rate stood at 6.7 percent in 2010, a 17.28 percent drop from the 8.1 percent rate in 2009. Since 2003, Brazil is hit with high employment rate of between 9 to 11 percent. As the economy expands, 14 million jobs has been created since 2003, and unemployment rate decrease annually to reach 6.7 percent in 2010. Brazil unemployment rate expects to remain at 6.7 percent rate for the next 5 years, given the continued growth of the economy and increase in job creation.

With a population of 203.42 million people, Brazil has a labour force of 103.6 million people, the sixth largest labour market in the world. Rapid growth and job creation in Brazil’s labour market, especially in the services industry attributes to the decline in the unemployment rate.

Brazil’s Inflation Rate & Current Account Forecast

Increasing inflation rate is one of the main threats to the economic growth of Brazil’s economy. Brazil’s inflation rate (Average Consumer Price Change %) is 5.037 percent in 2010, an increase of 4.9 percent from the 2009 rate of 4.899 percent. The inflation rate expects to hit 6.268 percent in 2011, a 24.44 percent increase from its 2010 figure.

With Brazil’s government introducing economic measures, such as raising the interest rate to curb the rise in inflation, the inflation rate is expected to fell to 4.777 percent in 2012, and remain within the 4.498 to 4.531 percent for the next few years.

Brazil has a current account balance of negative US$47.158 billion in 2010, and this make Brazil the top 5 countries in the world to record a negative current account balance.

Brazil’s current account deficit forecasts to widen to US$62.60 Billion in 2011, 31.74 percent more than the 2010 figure. Experts expects the deficit to widen further for the next 5 years, growing at a rate of 7 to 22 percent and reach a record high of US$120.023 billion in 2016.

The strengthening of the Brazilian currency, the real, attributes to the widening of the nation’s current account deficit. Being the strongest performing currency against the US in 2009, demand for imports of foreign goods have increased significantly, and a strong real discourages demand of Brazil’s imports.

Brazil offsets the widening of its current account deficit, by attracting foreign direct investment into the country with its high interest rate and strong currency. According to Brazil Central Bank, FDI stood at US$38 billion in 2010. Foreign investors also see Brazil’s continued economic growth and expansion as the reason for investment.