Brazil’s prospects

Bumpy road
Page 2 

Although I tend to agree with several points in the article by Joaquim Oliveira and Tristan Price (“Brazil: More Than Just Potential”, OECD Observer No. 228, September 2001), I fear the authors are too optimistic. The long-term view for Brazil has indeed improved over the past 10 years or so. But, unfortunately, we must cross endless short-term bridges to get there. There are various traps along the way, as well as several challenges.

First, growth remains constrained by the balance of payments – in spite of a substantial devaluation of the local currency vis-à-vis the US dollar over the past three years. Any hiccup in the world economy, any temporary rise in the risk-aversion of world financial investors, etc., bring this reality to the fore. The vulnerability of our external financing continues to haunt us, perhaps suggesting that we have not done enough in order to stimulate an “export culture” in the private sector and to convince trade partners (US-Europe) to reduce barriers to a wide number of our products.

Second, real interest rates are too high – at about 11-12% today. Managing the public sector finances with such high rates is almost impossible. The authors were absolutely correct to point out that “hard budget constraints have been imposed at all levels of government” and that the fiscal policy framework is much better now. Still, our public sector deficit remains at 2% to 3% per year, resulting from growing primary surpluses overshadowed by ever rising debt-servicing obligations. Total public sector debt now stands at about 55-60% of GDP and, with general electionsapproaching, talk of restructuring will inevitably pop up. Watch for nervousness in local financial markets, volatility, etc.

Third, political uncertainties will continue in the run-up to those general elections, due in October 2002, with concerns now raised about future economic policy direction and the commitment to reforms that favour long-term stability. I am sure that Brazil will tackle those challenges in its own unique manner. But the road ahead is bumpy and the “great future”, it seems, may still be a long way off.

Rodrigo Maciel,

Rio de Janeiro, Brazil

©OECD Observer No 229, November 2001




Economic data

GDP growth: +0.6% Q2 2018 year-on-year
Consumer price inflation: 2.9% Sept 2018 annual
Trade: +2.7% exp, +3.0% imp, Q4 2017
Unemployment: 5.2% Sept 2018
Last update: 13 Nov 2018

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Globalisation will continue and get stronger, and how to harness it is the great challenge, says OECD Secretary-General Gurría on Bloomberg TV. Watch the interview here.
  • OECD Secretary-General Angel Gurría with UN Secretary-General António Guterres at the 73rd Session of the UN General Assembly, in New York City.
  • The new OECD Observer Crossword, with Myles Mellor. Try it online!
  • Watch the webcast of the final press conference of the OECD annual ministerial meeting 2018.
  • Listen to the "Robots are coming for our jobs" episode of The Guardian's "Chips with Everything podcast", in which The Guardian’s economics editor, Larry Elliott, and Jeremy Wyatt, a professor of robotics and artificial intelligence at the University of Birmingham, and Jordan Erica Webber, freelance journalist, discuss the findings of the new OECD report "Automation, skills use and training". Listen here.
  • Do we really know the difference between right and wrong? Alison Taylor of BSR and Susan Hawley of Corruption Watch tell us why it matters to play by the rules. Watch the recording of our Facebook live interview here.
  • Has public decision-making been hijacked by a privileged few? Watch the recording of our Facebook live interview with Stav Shaffir, MK (Zionist Union) Chair of the Knesset Committee on Transparency here.
  • Can a nudge help us make more ethical decisions? Watch the recording of our Facebook live interview with Saugatto Datta, managing director at ideas42 here.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018