Record Levels of Uncertainty for Brazilian Economy

10/04/2013 - 08h49

Forecasts for Brazil's economic growth in 2015, the first year of what will be a new presidential mandate, currently vary from as little as 0.5% to as much as 4.5%. The four percentage points of difference show record levels of uncertainty regarding the future of the Brazilian economy in the next two years.

Forecasts for 2014 currently oscillate between 0.5% and 3.7%. Considering that these predictions are produced at the end of September ahead of the following year, the current differences of opinion between economic analysts are surpassed only by those in 2002, before the election of President Rousseff's predecessor, Luiz Inácio Lula da Silva.

'This great distance between the minimum and maximum predictions shows that the market is very uncertain about the future of the economy,' affirms Marcelo Fernandes, professor at the Getúlio Vargas Foundation of São Paulo and Queen Mary University of London.

There are a wide range of factors contributing to this ambiguity. Aurélio Bicalho, an economist at Itaú Unibanco, cites a sequence of unpleasant surprises relating to the recovery of the Brazilian economy since 2011, among other causes.

Frustration in relation to global economic performance, the presidential election of 2014 and the increasingly interventionist attitude of the government in recent years are also suggested by specialists as possible reasons for the lack of consensus.

On the other hand, there exists a real possibility that the international sporting events Brazil is due to host in the coming years, alongside the granting of infrastructure projects to the private sector, will have a strong positive effect on economic recovery.

Bráulio Borges, chief economist at LCA Consultores, suggests that the divergence exists as a consequence of the varying emphasis that analysts place upon each of these factors, without taking into account inflationary pressures.

However, the risk is that the current mood of uncertainty will only serve to further postpone Brazil's economic recovery.

Translated by TOM GATEHOUSE

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Editoria de Arte/Folhapress

futuro INcerto Previsões de analistas para crescimento em 2014 mostram nível elevado de insegurança