Brazil Registers Anemic Growth in 3rd Quarter, Surprising Economists

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SÃO PAULO, Brazil -- Brazil's economy registered anemic growth in the third quarter as investment levels remained disappointingly low, according to figures released on Friday. The results cast doubt on policies meant to prevent Brazil, recently viewed as the rising star among Latin America's economies, from turning into a laggard.

Gross domestic product grew just 0.6 percent from the previous quarter, stunning economists who had forecast double that rate. Brazil's economy is now expected to grow only about 1 percent in 2012, delivering a challenge to President Dilma Rousseff, who has tried to increase growth through an array of huge stimulus projects.

Even economists with favorable views of Ms. Rousseff's policies of assertively directing large government banks and other state-controlled enterprises to promote growth expressed surprise over the figures, which reflect a sharp departure from 2010, the last year of Luiz Inácio Lula da Silva's presidency, when Brazil's economy grew 7.5 percent.

Antônio Delfim Netto, an influential former economy chief, called the G.D.P. figures "a tragedy" in comments to reporters here on Friday. Under Ms. Rousseff, who has been president since 2011, Brazil is on track to deliver its weakest two-year period of growth since the early 1990s, before a stabilization program that radically restructured the economy. Finance Minister Guido Mantega contends that Brazil is on the cusp of a recovery, forecasting 4 percent growth next year.

While growth has declined considerably from the boom years, the slowdown has been blunted by state-supported projects aimed at creating jobs, like a shipbuilding sector conceived to support the oil industry. Brazil's unemployment rate, 5.3 percent, is still hovering around historic lows.

Authorities are also financing broadly popular antipoverty programs. Federal spending surged 9 percent in October compared with October 2011, partly a result of outlays for an moderate-income housing program called Minha Casa Minha Vida (My House My Life). As millions of poor Brazilians are shielded from the slowdown, Ms. Rousseff's approval ratings remain high.

Still, critics are growing more vocal about the need for Brazil to become more energetic in addressing complex structural dilemmas weighing the economy down, including its byzantine bureaucracy and woeful public schools. Ms. Rousseff is moving to address these issues; she altered an oil royalties bill on Friday, shifting 100 percent of future proceeds to an education fund.

Yet as economic growth slows to a snail's pace, smaller Latin American countries are doing better, calling into question Brazil's ambitions of exerting more influence in the region. Panama is set to grow 8.5 percent this year, according to the International Monetary Fund, while Peru should grow 6 percent and Mexico 3.8 percent.

world

This article originally appeared in The New York Times.


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