Excessive Stimulus Puts Brazil GDP Growth at Risk, Loyola Says

Brazilian President Dilma Rousseff’s excessive attempts to boost consumption are putting the economy at risk of overheating, which would make growth less sustainable, according to Gustavo Loyola, partner at Tendencias Consultoria and former central bank president.

If the economy expands too quickly, the government will be obliged to take measures to slow growth, said Loyola in a telephone interview from Sao Paulo.

Gross domestic product expanded 0.4 percent in the second quarter, the national statistics agency said today. That compares with a median forecast of 0.5 percent growth in a Bloomberg survey of 51 analysts.

“The growth is based on private consumption and government spending, which are expanding much faster than supply,” said Loyola.“The government needs to pay more attention to the increase in investment or we will fall into a ’stop and go’ situation.”

To contact the reporter on this story: Marisa Castellani in Sao Paulo at mcastellani7@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net