Brazil Posts Moderate Growth in ’99

Despite its traumatic currency collapse last year, Brazil managed to beat doomsday scenarios of economic havoc in 1999 and instead post moderate growth.

Brazil’s gross domestic product grew 0.8% in 1999, the government said. The advance was more than 1998’s 0.1% gain and a far cry from the 6% plunge some expected in the wake of the country’s January 1999 currency devaluation.

But economists warned that 2000 may not see as much growth as President Fernando Henrique Cardoso’s government has forecast: a robust 4% advance.

Still, Cardoso has much to be thankful for. Even his government had predicted a drop of 4% in GDP in 1999 as the currency crisis hit its worst point in March and interest rates spiked to 45%.

With the help of record grain harvests, however, Brazil’s economy eked out a small advance in the first quarter of 1999. And as inflation remained in the single digits, economists and the government began to paint a different picture.

Economists chalked up the buoyant numbers to a strong rebound in industry at the tail end of the year. GDP grew 3.1% in the fourth quarter. “Exports are improving, privatization spurred a great deal of investment, and interest rates, although high by international standards, have fallen to the lowest in five years,” said Odair Abate, economist at Lloyds Bank.