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article imageEconomist: Brazil may become seventh largest economy in 2011

By Igor I. Solar     Aug 20, 2010 in Business
The Economist Intelligence Unit is predicting that in 2011 Brazil would move ahead of Italy into seventh place in the ranking of the largest world economies with a GDP of US$2 billion.
The list of the world's largest economies is expected to have a major reorganization in 2011. According to estimates by the Economist Intelligence Unit (EIU), China would retain the second spot that took from Japan, while the second quarter of 2011 will see the rise of other emerging markets: Brazil, Russia and India.
The research unit of The Economist is predicting that Brazil, the eighth largest economy of the world in 2009, with a nominal GDP of $1.5 billion, followed by Spain, Canada, India and Russia, would continue in the same position during 2010.
However it is expected that in 2011 the largest Latin American economy will climb up to stand in seventh place in the ranking with a nominal Gross Domestic Product of just over US $ 2 billion. Thus, Brazil would regain the position it occupied in 1994 displacing Italy which it is not expected to reach $1.8 billion in nominal output. Another European Economy that will surrender position among the largest economies in the world is Spain, being relegated to the 12th post because of the significant advance of Russia and India.
The International Monetary Fund (IMF), however, in estimates released last April does not predict such an advance for the Brazilian economy until 2013. This may change, however, when the IMF revise its estimate in October.
Among the reasons for the changes in the ranking of the largest economies in the near future are the advance of the emerging economies that were not drastically affected by the 2008 crisis which left Europe and the USA with modest growth which is expected to continue in Europe until at least 2012 according with Negocios (in Portuguese). However, during the past years since the crisis, Brazil successfully committed itself to fiscal stability and responsible policies that encouraged investment and a large domestic demand. Additionally, the Brazilian economy is benefiting from the strong demand for commodities and raw materials from China. Another important factor strengthening the situation of Brazil and other emerging economies has been the currency appreciation against the euro and the dollar.
The situation of China as the second largest economy is expected to remain stable due to a growth forecast of 9.9 percent in 2010 and 8.3 percent in 2011. However, this assumes that the Chinese government is successful in its efforts to control the current massive increase in medium to high risk bank lending and large increases in house and land prices.
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