On the eve of the World Cup, the World Bank has lowered its 2014 global growth forecast from 3.2 percent to 2.8 percent. Russia is now expected to grow by just half a percent, while Brazil is also dropping down the league, looking at one point five percent growth. It’s the third year in a row when growth in the developing world has been below five percent.
One-off factors, such as the Ukraine crisis and the extreme cold weather in the US last winter, have been blamed for this year’s growth forecast being cut but, with Brazil in mind, is there a more worrying long-term pattern emerging? Saxo Bank's Chief Economist Steen Jakobsen says "Brazil is now one of the countries where 'stagflation' is a risk". Brazil is the the world's seventh richest economy, however growth has stalled, unemployment is rising and inflation is way off target.
Despite the twelve billion US dollars invested in the World Cup, the construction of stadiums and associated infrastructure will not be enough to ease the worsening economic conditions ahead of presidential elections in October.
