Brazil’s Economy Expanded Slightly in 2014

economy

Brazil’s Economy Expanded Slightly in 2014

Economy grew 0.1% for the year, but shrank 0.2% in the fourth quarter

By

JEFFREY T. LEWIS and ROGERIO JELMAYER/WSJ

March 27, 2015 8:38 a.m. ET

SÃO PAULO—Brazil’s economy grew slightly in 2014 from 2013, a better-than-expected performance, but shrank in the fourth quarter from a year earlier as investment plunged and industry contracted.

The country’s gross domestic product shrank 0.2% in the fourth quarter from the same period a year earlier, and grew 0.1% in the full year from 2013, Brazil’s statistics agency said Friday. GDP product grew 0.3% in the fourth quarter from the third, the agency added.

The agency changed the way it calculates GDP starting in the fourth quarter, including activities such as investment in research and development for the first time, in order to bring the methodology more in line with international standards.

Investment shrank 5.8% in the fourth quarter from the same period a year earlier, and industry contracted 1.9% in the same period, the statistics agency said. Brazil’s GDP in 2014 was worth 5.5 trillion reais (about $1.7 trillion), according to the agency.

The sputtering economy represents a big comedown since 2010, when GDP expanded 7.6% and the future for Brazil, and Ms. Rousseff, looked bright. But then the strong real and a weak global economy started to take their toll on growth, and Mr. Rousseff’s government responded with a series of measures that resulted in short-term bumps for GDP but finally left investors with the impression that the government had no long-term vision.

Ms. Rousseff’s government is trying to cut its budget deficit via tax increases and spending cuts. Many of the measures need to be approved by Congress, which is resisting passing some of them amid rising tension with the president over a kickbacks-and-bribery scandal at state-controlled oil company Petroleo Brasileiro SA.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com and Rogerio Jelmayer atrogerio.jelmayer@wsj.com

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