Brazil: Dancing through the economic crisis

by Dave

Highlights from a summary article, part of a recent special report in the FT on Brazil.
FT.com / Reports –

This is the Brazil that finally, after years of unfulfilled promise, is catching the world’s attention – and sucking in foreign direct investment, while many rivals go without. It is a mature democracy with a diversified economy, a young, adaptable population revelling in increasingly stable employment and rising incomes. It is also a rising power in food and industrial commodities, a big future exporter of oil and home to the world’s fourth biggest derivatives and equities exchange.

Brazil, unlike Russia, India and China,… is also largely unthreatened by social, demographic or economic upheavals.

As well as the strength of democracy and institutions, [Maílson da Nóbrega], a former finance minister, points to Brazil’s independent, investigative media and the population’s abiding intolerance of inflation.

But it is also a Brazil where old, bad habits die hard and where policy makers are still content, as the Brazilian expression has it, to push unappealing fiscal problems forward with their stomachs.

there has been a well-known list of “strategic” reforms that Brazil must enact if it is to achieve sustainable, faster rates of growth and the developed nation status that is coming into view but remains tantalisingly out of reach.

There is still ambivalence about how such reform should be achieved. Guido Mantega, finance minister, told the Financial Times in an interview for this report that he is preparing to do away with the 25.5 per cent “contributions” that employers must pay on top of payroll to a slew of welfare and educational institutions. no intention to tackle the rigidities of Brazil’s labour code – imported wholesale from Mussolini’s Italy – to deliver real dynamism and agility to the jobs market.

This, without a doubt, would remove a big element of the custo Brasil that saps the competitiveness of Brazilian business.

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