SAO PAULO: Brazil growth should pick up steam this year as interest rate cuts offset drag from a recession in the euro zone, going the opposite way to Mexico and Argentina, both of whose economies are expected to slow, a Reuters poll found on Thursday.
A major exporter of iron ore and agricultural products, Brazil's economy will gain strength from its expanding domestic demand and credit growth, economists said, growing by 3.3 percent in 2012 and by 4.5 percent in 2013, according to the median forecast of 35 analysts.
The economy is expected to have grown 3.0 percent in 2011 as fiscal and monetary tightening in the first half of the year to fight inflation took effect.
That marked an abrupt slowdown from 2010's 7.5 percent expansion and frustrated official estimates for 5 percent growth in the first months of Dilma Rousseff's term as president.
Fellow G20 members Mexico and Argentina, which lack the potential offered by Brazil's domestic market of nearly 200 million people, will find it more difficult to sustain current growth rates. Argentina will suffer a more pronounced bump because of capital outflows and a less expansive fiscal policy.
"Domestic demand should soon play a more prominent role in fighting off the global headwinds," said Mauricio Rosal, chief economist at brokerage Raymond James in Sao Paulo.
"We see this as crucial, as we believe that very few economies of similar scale currently have the same leeway (as Brazil) to incorporate such a domestic-driven recovery."
Greece and its bondholders are racing against the clock to avoid a disorderly default within the euro zone, which could potentially disrupt the global financial system.
The Greek drama has been compared to Argentina's $100 billion default in 2002. Since then, the country has been virtually shut out of global financial markets and has seen inflation ramp up to double-digit figures.
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