Review of 2011 and prospects for 2012
Fiscal discipline and economic stability are the foundation for ensuring further growth and job creation in 2012
In 2011, the accumulated surplus of the consolidated public sector (Central, Regional and State Governments) registered reached R$ 128.7 billion, or 3.1% of GDP.
This amount exceeds by R$ 820 million the R$ 127.9 billion target, which the government had already increased by R$ 10 billion. It also represents, in nominal terms, a 26.6% increase over 2010.
The evolution observed in Central Government accounts (National Treasury, Social Security and Central Bank) played a key role in bringing about this result. In 2011, the Central Government primary surplus hit the mark of R$ 93 billion, 18.2% higher than that registered in 2010 and R$ 1.3 billion above the R$ 91.8 billion target in nominal terms. The Central Government and consolidated public sector primary surplus targets were raised to R$ 97.0 billion and R$ 139.8 billion, respectively.
With a view to achieving these new targets, the government cut R$ 55 billion in expenditures contemplated in the General Federal Budget.
In January, the Central Government and consolidated public sector primary surplus rose to R$ 20.2 billion and 26.0 billion, respectively, the best results in that month since the beginning of the series in 2001. With these results, the Central Government has achieved 20.9% of its target for this year already and the consolidated public sector has achieved 18.6% of it.
Moderate Economic Activity and Employment Growth
Gross Domestic Product (GDP) grew by 2.7% in 2011. The economy continued to grow in all its supply and demand components, albeit at a slower pace than in 2010 (7.5%).
In terms of supply components, Agriculture was the best performer in 2011, with a 3.9% growth, followed by Services (2.7%) and Industry (1.6%).
In the industrial sector, the Electricity and gas, water supply, sewage and urban garbage collection (3.8% growth), Construction (3.6%) and Mineral Extraction (3.2%) sectors stood out. Manufacturing industry remained stable (0.1%) in relation to 2010.
On the demand side, Gross Fixed Capital Formation grew by 4.7% in 2011, more than Household consumption (4.1%), which has been on the rise for eight years in a row.
The labor market continued to grow in 2011, generating 1,944,560 formal jobs. In the first two months of 2012, 293,987 formal jobs were created.
Unemployment in the six metropolitan areas surveyed by the Brazilian Institute for Geography and Statistics (IBGE) - Belo Horizonte, Porto Alegre, Rio de Janeiro, Recife, Salvador and São Paulo - continued on a downward trend, amounting to 4.7% in December, the lowest estimated rate in all the series initiated in 2002, when the survey was redesigned. The average unemployment rate was estimated at 6.0% in 2011.
In the first two months of 2012, unemployment rates - 5.5% in January and 5.7% in February - were also the lowest ones observed in the same months in the series initiated in 2002. Labor market formalization continued on the rise in the last twelve- -month period ending in February, with a marked increase in formal jobs (5.4%) and a sharp decrease in informal jobs (-7.7%).
In 2011, the accumulated Broad Consumer Price Index (Índice de Preços ao Consumidor Amplo – IPCA) stood at 6.5%, remaining within the inflation target set by the Central Bank for the seventh year in a row.
In the first half of 2011, price indices were mainly pressured by food prices, which were influenced by the behavior of commodities in the international market. To ensure price stability in such a scenario, the Federal Government raised interest rates and applied macro-prudential measures to curb credit and guarantee fiscal consolidation.
Throughout the second half of 2011 and the first two months of 2012, the IPCA remained at a significantly lower level than in the first quarter of 2011, making way for inflation to converge to the center of the target set for 2012.
The highest volumes of foreign trade transactions ever were recorded in 2011: exports totaled US$ 256.0 billion and imports amounted to US$ 226.3 billion. Total foreign trade hit the mark of US$ 482.3 billion, up by 25.7% in relation to 2010 in the daily average comparison. The trade surplus amounted to US$ 29.8 billion, up by 47.8% over the surplus registered in the same period last year, also in the daily average comparison.
Foreign Direct Investment (FDI) closed 2011 with a record volume of US$ 66.7 billion, 37.4% higher than in 2010, consolidating Brazil as a prime destination for investments. In January 2012, FDI rose to US$ 5.4 billion.
The National Treasury continues to reduce the cost of raising funds abroad. In January, it reissued its 10-year reference bond in the amount of US$ 825 million and the rate of return on this bond for investors stood at 3.449% p.a., the lowest one among all foreign debt bonds ever issued in Brazil. International reserves closed 2011 at US$ 352.0 billion, up by US$ 63.4 billion compared to 2010. In February 2012, international reserves totaled US$ 356.3 billion.