Once again, Brazil seems to have missed an historic opportunity to transform itself and leap into the front rank of world economies. The FT reports that Brazil just had its worst quarterly slowdown in five years, its GDP is shrinking, and investment is drying up. The finance minister did his best to paint a rosier picture by blaming the global economy:
“The world is not having an easy year…2013 is still a year of crisis, probably the last year of the global crisis,” finance minister Guido Mantega said. “We are all in this boat together.”…“If this crisis hadn’t happened – a crisis that has affected many countries including Brazil – we would be close to 23 or 24 per cent [investment to GDP]….It will take us a few years to get to 24 per cent of GDP.”
Brazilians are unlikely to be placated by the government’s narrative of shared global misery, as their country seems dangerously close to repeating ruinous economic patterns. Brazil’s economy is volatile, prone to wild swings especially in its agricultural sector. Investors see it as excessively reliant on government spending and various credit schemes that never seem to actually spur growth. The FT quotes one economist who warns that two consecutive quarters of negative growth, leading to a “technical recession”, is not out of the question for Brazil.Meanwhile, Brazil is continually beset by the inflationary problems that have habitually kept it from becoming “the country of the future.” Well-founded fears that the old Brazil will return are a large part of what spurred the summer’s mass protests that began over bus-fare increases. President Dilma Rouseff has since recovered, but rising inflation and unemployment could make her reelection in 2014 a big challenge.