Only weeks after ranks of colourful floats paraded across Rio de Janeiro’s Sambadrome, observers are wondering whether the carnival is finally over for the Brazilian economy. The country’s gross domestic product grew by 2.7 per cent only last year. This is about a third of the rate in 2010 and the second-lowest since 2003.

Nostalgia for the recent roaring past should not lead Brasília to self-flagellation. The slowdown in the EU – Brazil’s main trading partner – and the steep appreciation of the real, largely because of hefty capital inflows, were bound to hurt exports. In spite of weakening growth, Brazil overtook the UK to become the world’s sixth-largest economy. But rather than resting on its laurels, Brasília should at least seek to get the economy back on to its trend rate of growth, which is estimated to be more than 4 per cent.

The Brazilian central bank may soon help to achieve this task by lowering the benchmark interest rate, which is still at double-digit levels. High rates have stunted the creation of a long-term lending market and limited investment in the country’s ailing infrastructure. But for rates to fall sustainably, Brazil must be able to stop inflation from creeping up again as it has done too often in the past.