By Dom Phillips
Just a few months ago, Brazil's government dreamed of a 4 percent economic expansion for 2012. With second-quarter statistics in -- GDP grew just 0.4 percent over the first quarter -- the Central Bank now says expectations are that the year will close on a figure of 1.64 percent.
That would be a comedown even from last year's disappointing 2.7 percent and a staggering drop from 2010's impressive 7.5 percent.
This is despite recent tax breaks for industry, interest-rate cuts to the lowest level ever (7.5 percent), and an ambitious investment plan for the country's faltering roads and railways.
The news deflated hopes that Brazil had pulled out of the doldrums. Beyond that, it was a blow to the nation's collective ego. Ordinary Brazilians are unusually obsessed with their economy, until recently a source of great pride. The euphoria felt in December when Brazil overtook the UK to become the world’s sixth-largest economy turned to disappointment when the Economist Intelligence Unit wrote that the countries had again swapped positions.
The day before, President Dilma Rousseff played down the significance of GDP as a measure of a country's value, arguing: "It is inadmissible that a country only looks at GDP. You have to look at GDP but also at what a country does for children and youth."
That provoked sociologist and lawyer Sergio Alves de Oliveira to respond on the website South 21 that Brazil also fares poorly on the Human Development Index, which combines measures of health, education and living standards. "On the HDI, the United Kingdom is in a privileged position. And Brazil? In 84th place," he wrote.
De Oliveira added that the comparison to the UK was bogus in the first place. Noting that in the more important measure of per capita GDP the UK bests Brazil $38,818 to $12,594, he wrote, "we have nothing to celebrate. Rather, we should be in a state of mourning and shame."
A resident of Belo Horizonte identifying as Jose Andrade wrote to the newspaper Folha de Sao Paulo lamenting that, “If we haven’t grown more than 1 percent in eight quarters, below many emerging countries, logically we are losing our position.” He continued, “We can’t compare ourselves to developed countries, which face a big crisis but have a high standard of living.”
Andrade touched on a common theme -- not only were Brazil's ambitions to developed-world status in doubt, it was falling behind other middle achievers. Folha de Sao Paulo pointed out that the country's second-quarter growth was less than that of Chile (1.7 percent) and Mexico (0.9 percent).
In an online piece for the Correio do Brasil newspaper, Nivaldo Santana, secretary of the national union of Brazil’s Communist Party, complained about "this irritating position of being last in growth among the BRICs and among the lowest in Latin America."
Commentators fretted about Brazil's losing its status as the dominant economy in Latin America to its northern rival, Mexico, which is now being discussed as the hot economy on the block.
Writing online for the business magazine Exame, economics reporter Beatriz Olivon pondered whether Brazil or Mexico would prevail. Olivon cited a blog by American investor Mark Mobius, a longtime champion of Brazilian growth, talking up Mexico’s prospects. Quoting a report by the Japanese bank Nomura putting odds on Mexico's outperforming Brazil, Olivon wrote that if that came to pass, "it would be the victory of a country with liberal economic policies and manufacturing production over a commodities exporter.”
The article's illustration hit Brazilians where they live: a photograph of the Mexican soccer team celebrating its 2-1 victory over Brazil in the gold medal match in this year's Olympics. Brazil had been the favorite.
(Dom Phillips is the Rio de Janeiro correspondent for World View. The opinions expressed are his own.)
Read more from World View, Bloomberg View's emerging markets blog.
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-0- Sep/07/2012 20:22 GMT