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Brazil Claims World’s Fifth Largest Economy Spot Ahead of Schedule - 16 August 2011

2016, the year of the Brazil Olympics, has long been cited as the time that Brazil will become the world’s fifth largest economy. However, on release of the 2010 GDP figures showing the highest economic growth in 25 years, some reports suggest that epic milestone may have come five years early.

On the back of 7.5% economic growth in 2010, Finance Minister Guido Mantega believes that Brazil is now ranked third in the world taking into account the pace of economic growth and has the fifth largest economy in relation to the G20 countries, overtaking France and Britain in the process. The availability of consumer credit, huge public and private investment and an ambitious government stimulus package have been credited for this, the country’s most brisk period of growth since 1986.

Some economists disagree with Senhor Mantega and instead have Brazil down as rising from eighth to overtake Italy and claim seventh spot in the world’s biggest economy rankings. It seems that the Finance Minister had made his calculations taking purchasing power into account – a technique that if performed on the whole G20 would have moved Russia from tenth to fourth and India from eleventh to sixth leaving Brazil at a net seventh anyway. Of course this left some confusion across the world as to whether Brazilians were fortunate enough to reside in the world’s fifth or seventh largest economy.

Samantha Gore, Sales Manager for Brazil-based estate agents uv10.com, insists that either way, the situation is extremely positive. “Brazil’s economy is growing much faster than that of France and Britain regardless. Even if the percentage rate dips a little over coming months – as is likely with newly elected President Dilma Rousseff keen to avoid overheating and eyeing more moderate economic growth of 4.5 or 5% for 2011 – Brazil won’t lose ground on the G20. If it’s not top five now, it will be very soon, highly likely well before the 2016 yardstick.”

A by-product of Brazil’s galactic growth is an expanding middle class - since 2003, 33 million people have risen to the ranks of middle-class or higher resulting in 105.5 million Brazilians out of a total population of 190 million now being officially classified as middle class. The rich are also getting richer as they benefit from a healthy stock market and boom in commodities export and consumption. Unemployment hit a record low in May 2011 at just 6.4%, the lowest since 2002, and a good deal lower than the 7.5% rate recorded for May 2010.

With new-found wealth and access to mortgages comes a hunger to reside in a stylish apartment in a good part of town, but Brazil has significant supply shortages in that all-important middle sector real estate bracket, especially in the booming north-eastern city of Natal. Developers are furiously constructing modern homes to right that wrong.

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