Unit 2 Macro: Brazil Overtakes UK in Economic Size

The Guardian has reported new research from the CEBR that Brazil is set to overtake the UK to become the sixth biggest economy in the world. The U.S., China, Japan, Germany and France occupy the top five places.

Typically the Sun newspaper gets their economics muddled with this piece of sloppy writing

“BRITAIN will fall to seventh in the league table of the world’s richest countries next year when it is leap-frogged by buoyant Brazil.”

Brazil richer than the UK? The Sun is confusing the size of GDP with the level of real GDP per capita (adjusted to a purchasing power standard). And as our Timetric chart shows below there remains an enormous gap in average living standards between the UK and Brazil.

Data from Timetric.

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World Bank from Timetric

But what is undeniable is that the UK economy needs to make more progress in growing trade and investment ties with the fast-growing Brazilian economy, a country with immense natural wealth. Brazil is the world’s largest exporter of sugar and the country is making big investments in clean energy industries.

Key Macro Data for the Brazilian Economy in 2011

Real GDP growth: (%) 3.1%
CPI inflation (%) 6.7%
Unemployment rate (% of labour force) Latest 5.8%
Current account balance (% of GDP) -2.2%
Fiscal balance (% of GDP): -2.7%
Interest rates (%) on 10-year government bonds: 11.2%

More here from the Daily Telegraph: Britain loses spot as sixth-largest economy to Brazil

Selected video resources:

BBC news: Taking off: Brazil’s growing middle class hits the beach

BBC News: China boosts Brazil’s booming economy

BBC News: Why is the Brazilian economy booming?

BBC Scotland: Brazil: An opportunity for Scots trade?