Low growth and high inflation in Brazil

5 Mar 2013 by Jim Fickett.

Last week Brazil reported national account figures, including GDP, through Q4. The economy is not very healthy – year-over-year growth to Q4 was only 1.4%. However revised figures for the last few quarters do at least suggest the growth rate is increasing:

In addition to slow growth, Brazil has a problem with inflation, which exceeded 6% in the latest figures:

In my view the biggest problem in Brazil is that the country came to rely too much on the easy prosperity of the commodity boom. Now tough reforms are needed to bring the long-term government budget back closer to balance and to allow more flexibility in the labor market. But politicians are still in the mode of looking for easier fixes like monetary loosening (for growth) and price controls (for inflation).

(For background, sources, and past commentary, see the Reference pages Brazil GDP and Brazil inflation.)