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Projected Growth in Brazil and Mexico Lowered

Via Bloomberg Business:  Latin America’s Two Largest Economies GDP Growth Forecasts Cut

Mexico’s economy will grow 2.96 percent this year, according to the median estimate in the central bank’s monthly survey published today, compared with the 3.35 percent estimated in the previous poll. Brazil economists cut their growth forecast for a third week to 2.77 percent, according to the central bank’s weekly survey of about 100 analysts.

Growth in the two economies that make up almost two thirds of Latin America’s gross domestic product slowed in the first quarter as exports weakened and domestic demand remained sluggish. Mexico’s central bank will probably cut interest rates for a second time this year, while Brazil is raising rates as inflation accelerates, said Marcelo Salomon, the co-head of Latin America economics at Barclays Plc.

Still, since Mexico only grew by 0.8% in the first quarter, an overall growth rate of almost 3% is not bad.  The long-term projections are healthy, albeit unspectacular:

Mexico’s economy will expand 3.98 percent next year, according to the survey released today, while Brazil is forecast to grow 3.4 percent.

Of course, projections are often not worth the electrons they are written with.

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About Steven L. Taylor
Steven L. Taylor is Professor and Chair of Political Science at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. He is the author of Voting Amid Violence: Electoral Democracy in Colombia and is currently working on a comparative study of the US to 29 other democracies. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging at PoliBlog since 2003. Follow Steven on Twitter

Comments

  1. Ben Wolf says:

    I am almost certain growth in those countries will fail to meet forecasts. They’re too dependent on foreign demand and the global economy is slowing.

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  2. stonetools says:

    More damage caused by wrongheaded austerian economic policy. When are we going to rid ourselves of these charlatans and adopt expansionary policies?

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  3. Andre Kenji says:

    @Ben Wolf:

    They’re too dependent on foreign demand

    Not in Brazil, that has a extremely high level of domestic consumption. In fact, that´s one of the main criticisms that the government is receiving, that´s the level of domestic consumption is too high. In fact, after 2008 the government did enact several consumption taxes holidays(Specially for cars and domestic appliances) and increased domestic spending.

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  4. Andre Kenji says:

    @stonetools:

    When are we going to rid ourselves of these charlatans and adopt expansionary policies?

    Brazil has a expansionary policy. Dilma Rousseff is criticized inside and outside Brazil because they basically used a expansionary fiscal policy to grow during the Global Downturn, but that she failed to solve problems with infrastructure and with the tax code.

    (Note: I voted for her, I vote for her again and voted for her former boss two times).

    As far as I know Mexico is hardly cutting government expenses. Few people talk about the schools and universities that Calderon opened because of the cartels.

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  5. stonetools says:

    @Andre Kenji:

    Brazil has a expansionary policy. Dilma Rousseff is criticized inside and outside Brazil because they basically used a expansionary fiscal policy to grow during the Global Downturn, but that she failed to solve problems with infrastructure and with the tax code.

    Good for Brazil then. They should go ahead and enact another round of stimulus(focused on infrastructure), since that makes economic sense, and then as the economy resumes its expansion, work on tax code reform.

    I’m surprised that Mexico is growing at all, given the drug cartels. They could do a lot more about political and economic reform.

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  6. Andre Kenji says:

    @stonetools:

    They should go ahead and enact another round of stimulus(focused on infrastructure), since that makes economic sense, and then as the economy resumes its expansion, work on tax code reform.

    Dilma Rousseff and Lula are trying to work on that. Dilma is getting tons of criticism from her own base because of the construction of Belo Monte, a hydroelectric dam in the middle of Amazon rain forest. There are also lots of people complaining about the public expenses with the stadia for the World Cup. ;-)

    There is also the construction of highways with Public Partnerships, but I´m afraid that the problems with infrastructure are too small to be solved in the medium term.

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