The 2014 FIFA World Cup is imminent. The 2016 Olympic and Paralympic Games are just over two years away. Next year Rio celebrates its 450th anniversary.
Later this year, the country holds its Presidential election.
So much anticipation…
Brazil is the B in the BRIC countries – and even made a bid to become a permanent member of the U.N. Security Council. Now, over the last five to seven years, Brazil did experience a boom. It lifted some 40 million people out of poverty in the last decade and kept unemployment rates at record lows.
But, as Ruchir Sharma of Morgan Stanley points out, the Brazil boom was really just a side-effect of the China boom. It was a time of cheap capital, emerging markets were hot, and China was growing fast and sucking up Brazilian raw materials and oil. Brazil rode the commodity wave as China imported its soy, iron ore, petroleum and other natural resources. Between 2000 and 2010, Brazil's exports to China grew by about four times the rate of total exports. By 2009, China had eclipsed the United States as the leading importer of Brazilian goods. The following year Brazil experienced 7.5% growth. But it was short-lived. GDP growth dipped to just 2.7% in 2011 and declined further to 2.3% by 2013.
Why?
Well, as Sharma also points out, China also experienced a downturn, seeing its growth rate dip below 8% in 2012 for the first time in a decade. If you feast on high commodity prices, you fast when they fall. Most important, Brazil wasted the good years, postponing reforms, lavishing subsidies on its people, and convincing itself that it had found a magic growth formula that required no pain, no discipline.
That complacency now has a cost. Standard & Poor's downgraded Brazil's credit rating in March. It is not quite in junk status territory, but S&P warned that it would make further cuts if Brasilia did not change its policies. Source: Global Public Square – CNN.
Coping with change
There has been a maze of comments about Brazil’s poor productivity. Mis-allocated funds, poor planning, ill-conceived projects all contribute. Poor funding processes hamper provision of basic services in health, education and sanitation. Many people in Brazil face harsh working conditions, struggle with poor public transportation. Many have more than one job to make ends meet. And most contend with the challenges of security and uncertainty in their daily regimes. Not at all easy…emblemic, however, of a rapidly changing, emerging economy and society.
“Brazil is a giant that grew too quickly, [V. Manoel writes in http://jungledrumsonline.com …] in a disjointed and disordered manner, a by-product of short-sighted colonialism, greedy Imperialism and speedy globalisation. It became urbanised and industrialised almost overnight without regard to the deeply rooted socio-economic disparities, which have since become even more pronounced. It’s very inaccurate to suggest that Brazilians are blithely basking in this chaos.”
