2012 has been a year to forget for Brazil’s struggling industry – just like the year before. But a weekly central bank survey of around 90 financial institutions says that will all change next year and industry will grow at healthy 4 percent pace.
Will it? One year ago, the same survey predicted 4.1 percent growth for 2012. Despite massive stimulus by President Dilma Rousseff’s government, including record-low interest rates and billions of dollars in tax cuts that were off everyone’s radar, industrial output in Latin America’s largest economy is set to fall by 2.3 percent.
The same pattern happened the year before. Two months before the start of 2011, analysts expected an expansion of 5.3 percent in Brazil’s industrial output but in the end it grew by only 0.3 percent.
Have economists been overoptimistic?
Luciano Rostagno, chief strategist at WestLB in Sao Paulo, said his 2013 forecasts consider a gradual recovery of the global economy and the effects of all the stimulus provided by Brazilian authorities. His estimate for industrial output is even more positive: 5 percent growth.
But the risks are clear, he admitted.
If global economic growth remains sluggish, Brazilian entrepreneurs may postpone their investment plans even further, despite all the stimulus offered by the government.