Country Report Brazil

Slower growth, but still a robust economic performance

• In 2012 growth is expected to slow down to around 3.0%-3.5% as exports will decline. However, domestic demand and investments will keep up the economy
   
• Despite still high inflation (around 7%) the central bank has surprisingly lowered interest rates in order to shield the economy from the Eurozone crisis and slowdown in global demand. But this comes at a time when the fiscal policy is quite expansionary
   
• Solid solvency and excellent international liquidity positions. Stable investment ratings guarantee that Brazil’s large external financing requirements can be covered easily 
   
• In the mid-term more fiscal tightening and reform efforts (tax and pensions systems) are necessary, but rather improbable due to the political circumstances (lack of coalition and party discipline)

Real GDP growth (%)

Source: EIU / IMF

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