According to the Brazilian Institute for Geography and Statistics (Instituto Brasileiro de Geografia e Estatística – IBGE) Brazil’s GDP grew 6.3% in the twelve months up to the end of September 2008.

The performance of the economy in the third quarter (July-September) was particularly impressive, with growth almost 7% higher than during the third quarter of 2007.

Though it is widely predicted that growth in the last quarter (October-December) will be much lower, or even zero, Brazil’s overall growth during 2008 is still likely to be around 6%, the highest figure since 1986.

Finance minister Guido Mantega said the Accelerated Growth Programme (Programa de Aceleração do Crescimento – PAC), public spending, the strong domestic market and the government’s investments in social programmes all contributed to the strong growth. In his opinion the Brazilian economy has ‘gained muscle’ and is in good shape to face the period of deceleration now expected as a result of the international financial crisis.

His view is shared by the chief global economist of Itaú bank, John Welch, who recently said Brazil’s economy is one of the best prepared to face the global crisis and will not enter into recession in 2009, although GDP growth over the course of the coming year might be as low as 2%.

Welch identified two main reasons why Brazil is well placed to resist the global downturn: the surplus in its external trade in commodities is relatively small (5% of GDP), and sensible and consistent macroeconomic policies have been implemented over the last decade. ‘The countries that have maintained prudent monetary and fiscal policies and deepened their structural reforms will fare much better than those that haven’t,’ he said.

Source: Embassy of Brazil in London