Earlier this year, analysts projected Brazilian GDP to grow at 4,9% in 2007. I found this figure to be ambitious. The reality is that Brazil will be clocking off 2007 with a substantial higher growth rate since the Brazilian economy expanded with a 5,7% in the third quarter. Brazil has been consistently lowering its interest rates over the past year, fueling consumer and business spending. Only now speculation arises that the Brazilian bank may keep borrowing costs unchanged for most of 2008 to cap inflation. For me personally this is good news. This will keep supporting the high Brazilian currency rate and make a nice yield on Brasilian bonds. I however believe that the Brazilian economy would thrive on a further decrease of the interest rate to a 9%.
There is a growing consensus amongst analysts that the US (and EU) economy is moving towards a recession in 2008. Some believe it to be a mild recession, personally I bet on a more severe scenario. I have the impressions that US and EU policy makers are not really fully aware of the significant downward risk to growth. Typically economists tend to overestimate the risk of rising inflation and underestimate the risk of downward growth. Especially today this is the case; there seems to be a view that EU and US growth will have just a 'dip' and resume in the second half of 2008. I'm (very) wary of such a scenario in the context of the current macro economical policies applied by the US and the EU.
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Dec 20 2007
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Dec 19 2007
This weekend, the ruling South African party, the ANC, will decide the leadership of the party. By monday we know who the ANC will put forward in the presidential elections of 2009. Current ANC president Mr. Thabo Mbeki is not eligible for re-elections, since he is currently in his second term; but as ANC president he could keep on controlling the powers and handpick himself his successor in 2009. Technically, the new president of South Africa will only be voted in 2009. But since the ANC controls more than 70% of the votes, the decision will be made this weekend. Current president Mr. Mbeki is the most prestigious political leader on the African continent. He has done well in managing the South African economy, which has achieved an unprecedented growth the past 8 years. Yet, despite this success, the benefits of this growth have not reached the poor. Poverty remains an increasing major problem of South Africa. Currently Mr. Jacob Zuma, 65 is the frontrunner for this weekends elections. He was fired by current president Mr. Mbeki as deputy president of the country last year over corruption allegations and positions himself as a champion of the poor. He is also a Zulu, the largest black tribe. The last two presidents Mr Mandela and Mr Mbeki were both Xhosas.
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