1 March 2013

The Brazilian economy grew at its slowest pace for three years in 2012, according to official figures.

Gross domestic product (GDP), which measures the value of all the goods and services produced, grew 0.9% in the year, the Brazilian Institute of Geography and Statistics (IBGE) said.

At the start of the year, the government was predicting 4.5% growth.

President Dilma Rousseff has been trying to stimulate the economy with tax cuts and low interest rates.

Most of the year’s growth came in the final three months of the year, when the economy grew 0.6%.

In 2011, Brazil notched up growth of 2.7% and overtook the UK to become the world’s sixth-biggest economy.

But on the basis of 2012’s figures, Brazil has now fallen back to seventh place, even though the UK’s economy only grew 0.2% in 2012, according to figures released on Wednesday.

Thanks to a decline in the value of the Brazilian currency, the real, the country’s economy shrank in dollar terms to $2.2tn, the IBGE said, while the UK’s grew to $2.3tn.

Brazil is not the only member of the Bric group of economies that is experiencing a slowdown. Russia, India and China are also finding that GDP growth has recently slowed more than expected.

“Slower growth in the Brics is likely to shave half a percentage point off global GDP growth over the next five years relative to the past decade,” said Mark Williams of Capital Economics.

“For Brazil, the issue is that consumer spending, which for years was the driver of growth, can no longer continue to increase at rapid rates.

“Brazilian households spend roughly a fifth of their income servicing debt – far more than over-leveraged US households did before the financial crisis. This debt burden has understandably started to take a toll on their spending.”