Brazil has been on the top of the list of emerging markets for the last years. Is this going to change from now on? In 2013, we certainly had negative signs: weak growth, inflation, and political interventions in state enterprises. Concerns with the advancement of public spending and doubts about the fiscal discipline of the government are hard to ignore. The credit rating agency Standard & Poor’s revised the outlook of Brazil’s sovereign rating in foreign currency from “stable” to “negative.” So is the dream over?
Here are some facts that may have an impact in Brazil’s near future.
Riots rocked numerous cities in Brazil. What was remarkable was the spontaneous and non-partisan manner of the manifestations.
Catholics from around the world came to Rio for the World Youth Day. 355 thousand pilgrims from 175 countries created an atmosphere of joy and peace of mind that impregnated the city and non believers. Nevertheless, Pope Francis got stuck in traffic.
Lula’s closest collaborators went to jail. A change in the impunity paradigm “white collars don’t go behind bars”. From now on they will?
The international press changed the tune about Brazil from positive to negative. The Economist cover of the Christ failing to launch is emblematic.
Eike Batista, once the hero of modern Brazilian entrepreneurship is now on Forbes the biggest career crashes list of 2013.
High inflation is back and the Dilma administration is surprised.
The Brazilian government put in place a new round of auctions, including airports and roads.
Will we be ready for the World Cup? Not sure. The secretary general Jerome Valcke suggested that Brazil needed a “kick up the ass” because of delays in infrastructure projects.
4 thoughts on “Brazil in 2013”
Excellent post, I scoopit and shared. I followed all those news items closely and it’s certainly going to be an interesting year.
There is a lot for Brasil to redirect right now…
The biggest lesson ANY country can learn can be from those that have been in similar situations and have regained their footing. Besides noting what they did, it is probably a good idea to emulate what they did to turn around their economy as well.
Things that are keeping Brasil’s future out of its reach?
Of the 5 BRICS, Brasil is the ONLY country where English is not spoken as a 2nd language fluently… language is important, potential and R$5 will get you ‘doces’ anywhere you want — something has to be done, otherwise Brasil could be looking at the RICS from behind… (something to note: in less than 5 years, English will be the MOST spoken language outside of the primary English countries thanks to China).
Taxes HAVE to be restructured — the current tax system has place Brasil as one of the most expensive countries to live in when it comes to relative prices. Most goods are 60% taxes, imports are 100% and more… A car sold in Brasil costs MORE THAN TWICE AS MUCH as the very same care imported to Mexico just due to taxes alone (Gol : R$18,000 in Mexico, R$39,000 in Brasil). Countries (and their States) elsewhere in the world that reduced their taxes learned to be more creative in gaining revenue for the government. Someone quipped recently that raising taxes is the surest sign that government lacks any form of innovative thinking to create revenue… Try arguing your way out of that one! EVERY country, EVERY State that has either ditched or lowered their taxes ALWAYS fared better in the long run. If the money is coming from the people, the people have less disposable income… and the less they money the can spend, then the slower services and products move… Has anyone EVER seen a country with high taxes flourish???? Talking FLOURISH, not just making life better for some…
International Trade — During a G20 Summit, President Dilma noted that something be done about the import tariffs as Brasil couldn’t compete… From what the reporter noted, you could have heard a pin drop onto the carpet… Someone had to remind her that Brasil’s tariffs is what keeps most from wanting trade with Brasil or is severally limiting it… The only way most foreign companies can trade here is to buy an existing Brasilian company — I’m scratching my head as Brasil also has a protectionist approach to trade. In this approach, isn’t Brasil saving the cows, but giving away the farm? Brasil needs to become competitive by reducing the cost of producing the goods so quality can rise…
Infrastructure — Needs an almost total revamping if Brasil is to be competitive with the BRICS — India is struggling, but they are DOING something, China is learning that even with 1.3 billion people there is a limit the government can do, so they innovating they way things are getting done by dumping the old ways…. South Africa is struggling, but also recognizes what has worked with other successful countries and are doing what they can with the little they have…
Energy — In ANY country, the cost of producing QUALITY goods is closely associated to the cost of energy it takes to make those goods — period. Most countries can obtain quality raw materials, but what is produced from those raw materials will vary depending on the cost of energy needed to produce the goods. In Brasil, the cars have only 75% of the welding points of cars in other countries — the welding points require huge amounts of electricity compared to energy costs of producing the rest of the car. Which dominoes into some of the unsafest cars in the world where the deaths are 4 times higher due to the lack of welds…
I stopped to take a break from a project I am working on, here it is nearly 30 minutes later… Which actually helps me with my last point…
Focus — Brasilians are partying lot… and they love to say yes… and they hate to say no… And this creates a huge problem. Why? Well, if you have a friend you can’t trust, and an enemy you can (because he has a focus that will permit him to say no)… is it really a good idea to be trusting your enemies and not trusting your friends? Focus kills potential and delivers reality, it puts placement on things and character that matter for the task at hand… When anyone lets their yes be yes, you know where they are coming from — you can trust their word… but when anyone’s word is not trust worthy, what good is it do any form of business with them? Ever notice a wealthy person (money wise or not) respects time? and a poor person (money wise or not) has no respect for time?
On a last note… There are 3 things and ONLY 3 things that will produce change from within a person, a community, a state, or a country…
— find out how whose voice they listen to…
— find out who they consider a hero…
— find out whose counsel they honor…
Change any 3 of them to those that value character, respect time and others, are more concerned with your needs than their own and you will see change almost instantly… change all 3 and you won’t recognize the person, community, state or country in a very short time…
But all this requires an uncommon focus, an uncommon leader, an uncommon approach… as well as leaving the old behind. Can’t grasp onto the future holding onto the past…
I read your post with great interest. As an American who is back to Brasil for my 3rd time and hoping to make a home here, the economic and political environment is of great interest to me. I have been following the unrest in Brasil, some of the rioting, the World Cup 2014 debates, and the Rouseff Administration.
As Brasil reemerges in both a political and economic sense, there are many hurdles to overcome. Brasil has had an enormous disparity between the wealthy and the poorest of poor. As the economy improves and the middle-class begins to grow, the poorest of the poor still seem to get left behind. It is like this in every country though. I agree with much of what Garrett points out in his post.
For Brasil to host the World Cup 2014, then the Olympics in 2016, the country has enormous challenges with infrastructure. From my previous visits to Brasil til now, I see the roads, highway systems, and train connections as being major issues facing Brasil here and now.
Politically, time will tell. When I was here in 2010, it appeared to me that Dilma Rouseff was not very well liked by many. In fact, when I was in Sao Paulo, it was openly stated that the only reason she was in the running was because President Lulu “wanted” her to be the next President of Brasil.
Every country has political issues. Brasil is one of them. Take a look at the USA now. Talk about a Political nightmare. The larger the government, the more corrupt everything becomes. With massive government, there really becomes less oversight. With this, you get the types of corruption you see in both America, and also in Brasil.
I want to see Brasil succeed. I love Brasil and the people here. But, what I see more than anything since my first visit here in 2002, massive inflation. Inflation is extremely bad for growth. I also see a nation who needs to relax importation laws. The prices of consumer products such as computers, cell phones, and electronics parts is astronomical when compared to the rest of the developed countries.
I cheer Brasil on, it’s people, success for World Cup 2014, and the Olympics. The international press is just being sensational (as always). My hope is that all Brasilian’s will pull together to put Brasil in the spotlight as a country on the rise, a country who values each person, a country that will grow to the number 5 position from the current number 9 spot by the year 2035.
Congratulations Brasil !