Brazil has moved up one place in the rankings of the world's largest economies, displacing the U.K. for the No. 6 spot, according to a study by the London-based Center for Economics and Business Research Ltd.
Said CEBR Chief Executive Officer Douglas McWilliams: "Brazil has beaten the European countries at soccer for a long time, but beating them at economics is a new phenomenon. Our world economic league table shows how the economic map is changing, with Asian countries and commodity-producing economies climbing up the league while we in Europe fall back."
Brazil's finance minister, Guido Mantega, said earlier this week that if the economy's growth trajectory doesn't falter, the country might become "the world's fifth-largest economy by 2015" taking France's place and, in the future, "maybe even Germany's." Mantega said he expects that Brazil will continue to grow twice as fast as the European nations. Although Brazil's growth has slowed in recent months because of the European debt crisis, Mantega predicted that the economy would expand between 3 percent and 3.5 percent this year and 4 percent to 5 percent in 2012.
Brazilian President Dilma Rousseff also is optimistic about growth in 2012 and has said that one goal in the coming year will be to reduce the nation's wealth inequality gap, which is one of the world's widest. The Brazilian government is considering easing credit by lowering interest rates and has raised the minimum wage to 622 reais ($332) a month from 545 reais. The increase goes into effect Jan. 1.
The CEBR's report cited a number of strengths underpinning growth in Brazil, which is Latin America's largest economy. It is a major exporter of commodities such as coffee and iron ore as well as manufactured goods. Companies such as state-controlled oil company Petroleo Brasileiro SA, or Petrobras, and mining concern Vale SA rank among the world's largest raw materials producers. Because of its prudent fiscal management, the central government has been able to implement policies to counter the European crisis and stimulate consumption. A strengthening currency has given Brazilians extra purchasing power to shop for consumer goods in Brazil and to invest in real estate overseas. Inflation has averaged about 5 percent a year since 2005 and infrastructure investment is surging as the country prepares to host the 2014 World Cup and 2016 Summer Olympic Games.
A decade ago Goldman Sachs enshrined Brazil as one of the BRIC countries (China, India and Russia were the others) with bright economic prospects. Goldman now says the best may be over for this foursome. Those with a dark sense of humor used to say that Brazil was the country of the future -- and always would be. The question now is whether the skeptics are making a mistaken return to the past.
(Mayara Vilas Boas is on the staff of Bloomberg View.)