The relevance of the original G7 is fading fast. Not only is China now the world’s second largest economy, but Brazil has reached sixth place in the world.
The South American giant passed the U.K. in 2011, despite the fact its real GDP growth plummeted to just 2.7%—down from 7.5% in 2010. Brazilian output was roughly $49.2 billion more than the U.K., according to some estimates.
Brazilian finance minister Guido Mantega believes that if the global economy had been stronger mid-year, his country could have posted growth of 4%. Real GDP growth reached 0.3% in the final quarter of 2011, just shy of Barclay Capital’s forecast of 0.4%, with downward revisions to growth over the previous three quarters shaving off some growth potential.
The highlight was the strong rebound in household consumption, which grew 4.5% annualized from a 0.2% drop in the third quarter.
Demand components had some recovery in the final quarter of the year, but fixed investments and government consumption remained at a depressed level.
“The growth slowdown in 2011 was driven by an overall moderation in the demand breakdown components,” notes Guilherme Loureiro, Sao Paulo-based economist at Barclays Capital.
Investment growth slowed from 21.3% in 2010 to just 4.7% in 2011, while private consumption softened from 6.9% growth to 4.1%.
Government spending also moderated to 1.9%, down from 4.2% in 2010.
Pension giants the Canada Pension Plan Investment Board and the Caisse de dépôt et placement du Québec have been investing heavily in Brazilian real estate of late.
Earlier this month, Ivanhoé Cambridge, the principal real estate subsidiary of the Caisse, announced it has investments totalling more than $300 million in Brazil, thanks to its joint ventures with Brazil-based Ancar, which specializes in the construction of shopping malls. The investments include the acquisition, expansion and building of shopping centres in the cities of Fortaleza and Rio de Janeiro.
In January, the CPPIB and the Caisse teamed up to make an equity investment of $80 million in Ancar, to acquire a 49% interest in a shopping centre in Rio de Janeiro.
Also in January, the CPPIB entered into a co-investment agreement with Brazil-based Aliansce Shopping Centers to acquire an additional 7.87% ownership in a shopping mall in Salvador, Brazil.