President Luiz Inácio Lula da Silva likes to boast that Brazil is advancing towards developed world status. Judging by the performance of the country's financial markets this year, many investors seem to agree with him. The real is the best performing currency in the world and Brazilian share prices have been repeatedly hitting record highs. Scratch the surface, however, and Brazil's new economic miracle is a lot less solid than it appears.

The problem is that the country's economy is not growing fast enough. Compared with Russia, India and China, the three other sizeable emerging economies a couple of years ago all famously dubbed BRICs by a US investment bank, Brazil is losing ground. Even though a combination of high commodity prices and abundant international liquidity represent the best external conditions for at least 50 years, Brazil will grow this year only by about 3 per cent. Quarterly figures released last week showed that gross domestic product actually fell between July and September.