September 1, 2013
By Taimur AhmadFor more than a decade, a credit-driven consumption boom helped fuel Brazil’s economic expansion, swelling the ranks of its middle class and lifting the hopes of a nation.
It was a story on which many pinned their hopes – not just households, but companies and investors, too, drawn in by what seemed an ever-expanding marketplace.
But that story began to fray two years ago, amid sharply slower growth. Brazil’s economy grew by only 0.9% in 2012. Although it is expected to expand by more than 2% this year, it’s still a far cry from the 7.5% growth of three years ago. Consumer confidence has also since plummeted, as concerns grow over rising prices and the higher interest rate
As Brazil’s prospects take a turn for the worse, its much-touted consumer growth story has come to an end, says Gávea Investimentos chief Arminio Fraga. A less exciting world will replace it