Brazil still might be the darling of foreign investors and Miami real-estate agents but as the year draws to a close, its once booming economy is slowing.
Fueled by a commodities boom, a growing middle class, and mineral wealth, Brazil’s economy hummed along with a 7.5 percent growth rate in 2010. But now most economists are pegging gross domestic product growth at 3 to 3.5 percent this year — and in its most recent forecast, Fitch Ratings said the Brazilian economy would grow only 2.8 percent.
“Brazil is slowing down; it’s been slowing down since the second quarter,’’ said Guilherme Da Nobrega, senior economist at Sao Paulo-based Banco Itaú, during a recent visit to Miami. His estimate has been revised down from 3.6 percent to 3 percent growth.
The Brazilian economy, he said, “was growing too fast at the end of last year.’’ Inflation also was rising.
That economic exuberance — coupled with a strong real and depressed local real-estate prices — drove Brazilians to Miami in 2011 to buy everything from ocean-view condominiums to sports gear, iPads, and fashion.
The Brazilian economy also is closely watched in South Florida because Brazil is the region’s top trading partner, and earlier this year a group of nearly 200 Floridians traveled to Brazil on a trade mission led by Gov. Rick Scott.
To cool things down, the Brazilian government adopted tighter economic policies at the beginning of 2011; its central bank also raised rates. The government also held back on public spending for infrastructure projects, such as bridges, said Da Nobrega, who spoke at the Americas Society/Council of the Americas Latin American Predictors Forum in Coral Gables earlier this month.
“That did the trick,’’ said Da Nobrega.
But Brazilian industrial production began to slump in the third quarter and was down 2.2 percent in October compared to the previous year. Twenty out of 27 sectors contracted during the month, according to Barclays Capital.
Though it is still considered strong, the Brazilian currency also began to bounce around this fall — a change that has affected some Miami real-estate purchases. The real has fallen 8.1 percent against the dollar in the past three months.
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