Brazil & Southern Cone - January 2011 (ISSN 1741-4431)

The interim president of the central bank, Luis Campos, is confident that inflation in 2011 will be 6.3%, despite the prospect of another year of spectacular GDP growth on the back of another bumper soya crop. In 2010 inflation was 7.2%, just inside the central bank's target of 7.5%. This was a decent performance given the fact that local food prices rose 16% and the local economy grew a staggering 14.5% year-on-year, thanks to the bumper soya crop.
The central bank's forecast is brave given that monthly consumer price inflation in December 2010 was 1.5%. In calendar 2009, it was just 1.9%. According to the central bank, the country's GDP increased from US$15.5bn in 2009 to US$17.8bn in 2010. Staggeringly, GDP has doubled since 2006 (when it was US$8.5bn) and trebled since 2003 (when it was US$5.3bn). Per capita GDP has jumped from under US$1,250 in 2004 to US$2,733 in 2010.
Essentially, the country's GDP depends on the size of the soya crop. So GDP forecasts are little more than weather forecasts. The agriculture ministry is now forecasting that the 2010/11 soya crop will be 7.5m t. The ministry is an average yield from the 2.68m hectares planted of 2.79t per hectare, up from 2.6 t per hectare in the 2009/10 crop. The country is the world's sixth largest soya producer and its fourth biggest soya exporter.

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