Yes, growth in Brazil in 2012 but Disagreement about Extent.

On Thursday this week Brazilian news reports that economic analysts at the nation’s biggest private bank, Itau Unibanco, agreed in principle with the economic views of President Rousseff. However, where they seemed to disagree with her was about the scale and extent of the nation’s economic expansion which she so confidently forecast for 2012 earlier this month.


‘Dilma’ (the President is widely referred to by her first name) optimistically announced to a gathering of journalists that she expected GDP to expand by between four and a half and five percent in the coming year. However, Ilan Goldfajn, the Bank’s chief economist was more pessimistic, predicting a figure more likely to be around the three point five level. He did however accept that circumstances may change to improve that figure.

Meanwhile, Brazil’s Central Bank has been cautiously easing the SELIC (Sistema Especial de Liquidação e Custodia) basic interest rate, starting in the summer with more cuts planned for the near future, as the level inches towards the 10% benchmark from its current rate of eleven and a half.

Despite the fact that some see the ten per cent as a barrier below which SELIC will not be allowed to fall, Ilan Goldfajn feels that is not necessarily as rigid a barrier as they believe.

All this has implications of course for international investment in Brazil, especially in the construction programmes creating the affordable housing schemes so important to the emerging middle classes. Most people in the industry are hoping that Dilma is the one with her finger nearest to the pulse of Brazil’s prosperity in 2012!
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