Brazilian-German Index Shows Brazil in Boom Phase of Recovery

    Luxury train in Brazil

    Luxury train in Brazil For the first time since January 2008, the Economic Climate Index (ECI) in Latin America, (developed in partnership between the German Ifo Institute and Brazil's Getúlio Vargas Foundation) rose to 5.2 from 4.0 points between July and October 2009, exceeding , the average of the last ten years (5.1 points).

    The index, which had been falling since July 2007, reached in January 2009 the lowest level of the series started in 1990: 2.9 points.

    The Present Situation Index (PSI) rose to 3.3 from 2.6 points between July and October 2009, and the expectations Index (EI) increased to 7.0 from 5.4 points. Therefore, the present situation is still regarded as unfavorable, but the expectations continue to point towards a positive scenario.

    The region remains in the recovery phase of the cycle, following therefore the global results. With an unfavorable PSI – 2.9 points – and a favorable ECI – 7.2 points – the World ECI reached 5.1 points in October.

    Perception of the present situation in developed countries remains unfavorable. In the US, for instance, the PSI increased to 1.6 from 1.4 point; in the European Union to 2.3 from 1.6 points. However, it is prevalent in all countries a positive assessment about the direction of their economies in the near future (six months).

    In the US the EI increased to 8.3 from 8 points and in the European Union to 6.7 from 5.8 points. The low value of the PSI leads to ECI below 5 points in the European Union, Japan, Germany, France and United Kingdom. In the US, the ECI was of 5 points.

    While most developed countries are in the recovery phase of the cycle, the BRIC countries are already in the "boom" phase, associated with favorable PSI and EI, with the exception of Russia.

    In strict terms, China would be at the boundary because their PSI reached 4.9 points. In the July survey, the highest ECI among the BRIC countries (Brazil, China, Russia and India) was that of India, followed by China and Brazil.

    The present survey puts Brazil in the first place, with an ECI of 7.4 points, followed by India (7.0 points) and China (6.5 points). PSI in Brazil surged to 6.4 from 4.3 points and EI increased to 8.4 from 6.6 points.

    The survey shows that the world economic recovery has begun by developing countries, especially the so-called emerging markets in Asia and some Latin countries.

    In the July survey, five Latin American countries were in the economic recovery phase (Brazil, Chile, Colombia, Mexico and Peru) and six countries under recession (Argentina, Bolivia, Ecuador, Paraguay, Uruguay and Venezuela).

    In the current survey, Brazil, Peru and Uruguay have entered the boom phase. Highlight to Uruguay, which was in recession with both indices in the value of 4.6 points. In October, PSI increased to 5.4 points and EI to 7.2 points.

    Brazil stands out for presenting the highest indices in the region, including economic climate, present situation and expectations.

    Argentina and Paraguay have come out of recession and entered the recovery cycle. Indicators on the present situation are still unfavorable. In Argentina, the PSI was 2.8 points and 3.0 points in Paraguay.

    In addition, the EI of 6.1 points in Argentina suggests an outlook for improvement slower than that in Paraguay which recorded an index of 8 points. Bolivia is on the border between recession and recovery, as both PSI and EI reached the value of 5 points.

    Chile, Colombia and Mexico remain in the recovery phase. All indicators have improved, but the main increases are related to expectations indices.

    The highest ECI from these countries is in Chile, the value of 6.2 points associated with a PSI of 4 points and an EI of 8.3 points. In Colombia, the PSI rose to 2.7 from 2.2 and the EI to 7.2 points in October from 5.3 points in July.

    Mexico is in the worst situation. Their PSI increased to 1.4 from 1.3 points and EI to 6.8 from 5.7, which results in ECI of 4.1. The improvement in expectations in the US (EI 8.3 points) seems not to have influenced the Mexican economy.

    Ecuador is still in recessionary phase. Their PSI has worsened, falling to 2 from 3.4 points, and EI increased by 0.2 percentage point to 4.0 from 3.8 points. Venezuela keeps pace with Ecuador in terms of classification in the cycle, but recorded a significant increase in EI, surging to 4.3 from 1.8 points. PSI increased to 3.0 from 2.6 points.

    In October experts were consulted about the main problems their economies are facing. The list includes the following items: lack of confidence in government policies, insufficient demand, unemployment, inflation, lack of competitiveness, export barriers, skilled labor, budget deficit, foreign debt, and lack of capital.

    Unemployment was identified as the main problem in Chile, Colombia, Mexico and Ecuador. Lack of confidence in government policy appears in Venezuela, Paraguay, Argentina, Bolivia and with equal weight to unemployment in Ecuador.

    The budget deficit was cited as the main problem in Uruguay and lack of competition in Brazil and Peru. In Brazil, the public deficit came in second place.

    Mercopress

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    Brazilian president Lula

    Brazilian President Calls World Criticism of Biofuels “Dirty Trick”

    Brazil is not that "poor little thing" anymore and the country will not allow ...

    Brazil Consumes 30% More Fish. But It’s Still 18 Lbs Per Capita a Year

    In two years, the average consumption of fish in Brazil increased about 30%, going ...

    Retired Brazilian general Rocha Paiva

    Brazilian General Accuses Lula of Lack of Independence for Opposing US Bases

    Brazil magnified the importance of the deployment of US troops in Colombian military bases, ...

    Wedding

    Sour Brazil-US Relations Couldn’t Spoil the Joy of Our Children’s Wedding

    My son married a lovely Brazilian woman. Their friendship, romance and eventual nuptials extol ...

    Brazilian president Lula hold ethanol jar

    Brazilians Betting Obama Will Be Green Enough to Help Brazil

    Brazil is hoping that its ethanol may gain momentum and space in the United ...

    Brazil Is in Need of a Social Shock and an End to Privilege

    In a July 1998 Veja magazine interview I suggested that, were he to be ...

    Brazil Draws a Road Map for Its 10 Frontiers

    The Brazilian government is studying the implementation of development policies for frontier regions. According ...

    New Missile to Be Launched by 2006, Says Brazil

    Brazil’s National Space Activities Program (PNAE) has strategic value for the country’s development, and ...

    Pow! Wow! The Spirit of Brazil.

    Brazilian Spirit of the Amazon is very similar to modern American comics. Its content, ...