Despite pessimistic predictions, Brazil’s economy grew at a faster-than-forecast rate in the second quarter of 2013. New data from the Instituto Brasileiro de Geografia e Estatistica show that Brazil’s economy grew 3.3 percent in the last twelve months.
Economists have pointed to Brazil’s agricultural industry as the primary reason for the stronger-than-expected economic growth, citing a 3.9 percent increase in total production as the primary driver of Brazil’s economy.
Many analysts had predicted a slow quarter for Brazil, with figures of 0.9 percent a popular prediction for second-quarter growth. The economy, however, grew by 1.5 percent during the second quarter, compared to first-quarter performance.
Brazilian Finance Minister Guido Mantega also lowered his estimates for economic growth, aiming for a conservative 2.5 percent annually compared to three percent, the government’s previous growth estimate.
Official estimates for 2013 have also been reduced, with total growth for the year now forecast to be four percent, down from 4.5 percent. The country has suffered from a downturn in economic performance that began in early 2012.
The Brazilian economic downturn has resulted in a serious decline in the value of the nation’s currency. The Brazilian real has decreased 20 percent against the US dollar since the beginning of the year, putting a strain on the Brazilian economy.
Economists claim that an increase in capital invested outside Brazil has pushed the nation’s currency down and reduced the spending power of Brazilians. Others point to the nation’s high annual inflation rate, which is currently 6.15 percent.
Despite the increased agricultural activity, economists remain concerned about the future for one of South America’s largest economies. Brazil’s high inflation rate and rising cost of living have made life difficult for many in the country.
The Brazilian government has taken steps to reduce inflation by increasing interest rates and pledging to adjust rates in response to further economic events. Analysts believe that higher interest rates would allow the government to better control any future inflation.
