Brazil’s economy


A long-awaited recovery still fails to materialise

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Readers' comments



Hank Chinaski

A lot of people here months ago were all "Brasil has the UK economy in the bag" and "the US is finished and on its knees".

Gee. What happened?!

Who is to blame?

Lulla said that 2008 was "Bush's crisis, won't affect us". Oh well.

Well, turns out the US grew thrice as much as Brazil last quarter.

So, let's recap a bit: if the Emergent Gods of Tropical Rome (Brazil) grew a third of a falling giant who is ruined, what does that tell us?

I mean, come on, it's kind of obvious right?

But hey, let's do it like Mantega does and pressure IBGE to "revise the GNP figures".

Yes, like the other hoodlums from PT/Government, he wants to control that too.

Link in Portuguese about how the Economy Minister wants more control over the official statistics department of the government:

Brazil is a joke. The sooner its people stop celebrating the micro victories that mean diddly-squat and face the hard cold facts of life, the better.

But they won't.

Luiz_RJ in reply to solventurine

That's the typical "shoot the messenger" approach the PT sympathizers are so fond of. There's a reason why it makes sense to expect much more growth from Brazil than from the UK or Germany: we're a poor country, and they're very rich! The average Brazilian workers makes about 75% less than the average brit or German. We have vast amounts of catching up to do before reaching even the same ballpark. So claiming that we are in a better position than the the EU countries, as Dilma likes to do, is just proof of economic illiteracy.

A decent comparison would be with Chile, Peru or Colombia, our neighbors with similar levels of development who are also big commodity exporters. And guess what? They're growing fast, as opposed to Brazil, which is stagnated.

That's why Mantega has to go. That's why Dilma has to go in 2014. We've had enough corruption, mismanagement and economic interventionism. No more mensalões, no more rosemaries, no more erenices! No more PT!

Lauro Sá

If it were up GDP result the Economist should ask for the resignation of the finance ministers of Germany, France, England, Ireland, Greece, Italy, Portugal, Spain, Belgium, Japan, and etc. It's unfortunate this publication, but as the press is free and the Brazilian supports the free press, because the country is the world's second largest democracy, the only thing we can make is to smile about this bullshit.

Ferromanganese in reply to Blzulian

The last time I read a piece by Luis Nassef, he confused the Selic rate with the 10 year bond yields the Brazilian government pays on its debts, comparing Brazil's previous double-digit interest rate with the 7% yields the Spanish government was facing in its bond auctions. It was an apples and oranges comparison that made no sense to anyone who understands economics.

But hey, if the PT wants to resort to those arguments, I say they should go right ahead. Saying that "the country is running like I never saw before" is a statement ground in relativity, not objective facts. I look outside my window right now and see a hotel being built across the street in preparations for the World Cup. Does that mean the fundamentals of the Brazilian economy are strong? Of course not. I really find it shocking how quick the Brazilian hard left is to attribute any bad news to a conspiracy between the "elites" and the "media". Reminds me of the wacko Tea Partiers from back home in the US.

An objective analysis of the facts makes it pretty clear: Brazil's boom is over, the economy is completely stalled, and the current government clearly has the wrong approach to instill business and investment confidence to bring down the Brazil Cost and get things back on track. A sad state of affairs. But the PT's inability to change will spell its own demise sooner or later, maybe not in 2014 but most definitely by 2018.

James AntiBr

It seems the following problems are not going to
improve the economy any time soon.

1)Cocaine flowing through Brazil's porous borders

2)Hackers using low tech, yet an effective approach
to rip off one of Brazil's biggest Bank.

3)Brazil Cost (Custo Brasil). Self-explanatory. Unless you are
an easily manipulated Gringo enthralled with Brazil's "Potential."

4)60 Policemen arrested on Drug Lord's equivalent of
a Mensalao (look up Mensalao if you don't know about Brazil).

Brazil is a member of the BRICs. The Four Horsement of the Apocalypse if these four backwards minded, corruption infested,
and authoritarian societies ever get to rule the world. Say
no to Brazil as UN Permanent Security Council Member!!!!
Brazil was rejected at the League of Nations for good reasons.

Hank Chinaski

Poster Ygor BS said below to a Brazilian poster who has been out of the country for 13 years that:

"It would also be very interesting to know how you are able to know if Brazil has or has not changed since 13 years ago, especially considering that since then the infant mortality has decreased by more than 50%, the illiteracy rate has went down by more than 1/3 and the life expectancy grew from less than 70 to 74 years."

Here are a few arguments rebuking Ygor BS' "arguments":

What you are "forgetting" to tell, Ygor BS, is that other countries enjoyed a much better performance than Brazil i.e. Brazil actually improved LESS than its peers.

Uh oh, due diligence is a b!tch.

(here's where you will say that Wikipedia is not a reliable source, even though it is getting its data from the UN).

In the page above you will notice some interesting facts:

-Peru improved more than Brazil both since 1950 and in the last 15 years. Oops.
-So did Ecuador
-So did Vietnam, Tunisia (war notwithstanding), Jordan, Togo, Moldova, Syria, Lybia...
Brazil sits right now at the amazing 107th spot.

It is behind countries it feels oh so superior too such as:

-Argentina and Uruguay (obviously)

Paraguay is not so behind.

And IRAQ, yes, you read me right, is not that far from Brazil either (36 deaths / 1000 in Iraq against 28 in Brazil). If we consider 1950 to 2005 Iraq improved more in % terms than Brazil despite having had decades of war. Gee. How do you explain that?

The mortality on the Palestinian territories is lower than Brazil too.

Some job Brazil did eh?

Countries that decreased its mortality rate in a very similar pattern:

Hello Cape Verde, Ecuador (although the latest beats Brazil), Guatemala, Morocco to some extent.

Life expectancy:!ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_le00_in&scale_y=lin&ind_y=false&rdim=country&idim=country:USA:BRA:PRY:CHL:ARG:DZA:COL:MEX&ifdim=country&hl=en_US&dl=en&ind=false

This chart shows Brazil's improvement is par for the course mostly. It's still behind say Colombia, a country in a civil war, Mexico (ditto, and behind by staggering 4 years!!), well behind Chile (which by itself is ahead of the US).

So Ygor BS, what about next time you try to justify your "arguments" you compare how Brazil fared compared to its peers?

So, in this measurement Brazil has nothing to write home about either.

So, your claim that "Brazil is changing" is actually true, it is just losing, yet again, the train to modernity and changing less than its peers.


To anyone residing in Brazil with more than a couple braincells, the underperformance was not a shock at all. To many people it has been clear since Q1 that 2012 growth would be below 1%. It's extremely simple: stop meddling with dirigist measures, favoring specific sectors (if not companies), and simplify the tax code and redtape for all...
And I know that wit this I am not offering anything new, but obviously PT wants to see water flowing upstream at any cost instead

Hank Chinaski in reply to Rogerio Maestri

Ok Sherlock, let's compare the following then:

Per capita income:
UK: 35k
Brasil: 11k

Nobel Prizes:
UK: 118
Brazil: 1 (winnr left Brazil when he was 15, never to come back, so, I am being generous here)

Literacy rate:
UK: 99.9%

Infant mortality:
UK: 4.91 / 1000
Brazil: 28.28 / 1000

So let's recap: are you saying we shouldn't listen to a country that has less than a fifth of the mortality rate, virtually no illiteracy (while Brazil has more than 20 million illiterates), 118 Nobel prizes to Brazil's 1, more than 3 times the per capita income?

I mean, the UK is OBVIOUSLY doing something right. I guess it would be pretty hard to argue with the figures above.

Can't say the same about Brazil, can we, Sherlock?

I mean, not that being ranked 107th in infant mortality is bad, I mean, it's no shame to be behind of Togo, Ecuador, Palestinian Territories, Vietnam, China, Lebanon, Suriname, ... but still right?

Brazilians are masters of arrognorance: the dangerous mixture of ignorance with arrogance.

(I am Brazilian by the way, so, don't come back with the predictable "yeah but your country has problems too).


Why am not surprised? The Economist publishes a factual article, if anything way too benign to the grotesque incompetence of Mantega and his boss, Dilma. And the PT sympathizers, as always, show up to shoot the messenger. And this time they added something new to their arsenal of dishonesty: questioning the very GDP result itself! No, GDP growth can't be this pathetic, they say, after all Brazil is being run by the all-knowing commissar Dilma! CartaCapital says all is fine and Brazil is the greatest country in the world! Paulo Henrique Amorim and Luis Nassif agree!

Deal with it, petralhas, we are not growing at all. And PT is to blame. The commodity-exporting Chile, Colombia and Peru are growing fast. Why aren't we? Why is our growth in the last two years the worst since Collor? Why is private investment falling month after month?
It's time to change this corrupt, incompetent and interventionist government. If we want growth, if we want to be more like Chile and less like Venezuela, we need to get rid of PT ASAP.

PS: Please, petralhas, don't quote Luis Nassif if you want to be taken seriously here. At least pretend to have a brain.

Hank Chinaski in reply to Theoresopolis

"US, Japan, France, Britain, Italy and Spain wouldn't be where they are today."

Last time I've checked:

-None of these countries had 80 cops killed in a month in its biggest most important city
-All of these countries won several Nobel Prizes
-The per capita income of all these countries is at least 3 times Brazil's
-There is no illiteracy in any of them
-The US grew more than 3 times as much as Brazil in the last quarter

The notion that "US, Japan, France, Britain, Italy and Spain" are worse off than Brazil is ridiculous.
Here, do this test: go to Plaza del Sol in Madrid, sit in the sun, and tell me how "bad" things are compared to a favela in Rio.

Rogerio Maestri

2007 3º T 1,2%
2008 1º T 0,1%
2008 4º T -2,1%
2009 4º T 0,4%
2010 2º T 0,7%
2011 4º T -0,4%
2011 3º T 0,1%
2012 3º T -0,4%
Data: OCDE
This is the change in GDP English, not Brasilian GDP evolution.
It was not the best "The Economist" demand the resignation of all English government.
Look after of your business.
In Brazil There is an adage:
Each monkey who cares if its tail.

Hank Chinaski in reply to YgorC.S.

Pernambuco is another backwater, retrograde place that matters little if at all.

It missed its only chance to get anywhere close to respectability when it sent the Dutch away.

They are still celebrating new sugar mills that will take them to 1st world status.I mean, how now naive and completely unaware of how the actual world and the richness formation process is you have to be to realize that sugar isn't really the way to riches?


I suggest to the economist look at the UK economy and and advise Cameron to sack of George Osborne and perhaps give same advice to Markel to sack of the Bundesbank's president Jens Weidmann, as Germany economy is sinking. Germany's central bank, the Bundesbank, has cut its growth forecast for next year, saying the country's economy might be entering a recession. Growth in 2013 is now expected to be just 0.4%, compared with a forecast in June of 1.6%, but is expected to bounce back to 1.9% in 2014
The Bundesbank has cut its growth forecast for the current year as a whole to 0.7%, from 1% previously, in light of what is seen to be a very poor performance since the autumn.
why not looking to Europe crises before making foolishest comments about Brazil economy, is clear that the economist is already campaigning against PT , Dilma for next Brazil election .


As long as Eduardo Campos' Pernambuco keeeps being a high-growth state which happens to be richer than its Northeastern neighbors (like Ceará and Paraíba), but fails to have better health and education data than them, I will highly doubt his so-called "Pernambuco model" is transformative indeed for Brazil. According to the brand new ISDM (Social Development of Municipalities Index) published by FGV, Pernambuco has better scores than its neighbors in what refers to income and work environment, but it still lags behind them in what refers to health, security and education. So, it seems that, for all its remarkable advances, the state under Eduardo Campos has grown more than it has really developed. That is the exact opposite of what has happened in other Brazilian states and, in fact, in Brazil on the whole, where the social data have improved faster than the overall wealth, mostly due to the decreasing inequality in the distribution of the "fruits of progress".

As for Brazil's stalled growth, I absolutely agree it is scandalous that the recovery has been so slow, but I think the report should have cared to detail the numbers about the 3rd quarter of 2012. While the growth was a mere 0.6%, and the services's growth was a negative surprise, the agribusiness sector grew by 2.5% and the industry grow around 1%. The financial sector was the main cause for the lower growth, and it has been discussed in Brazil that the methods used to calculate the production of the financial sector are perhaps biased, giving over-representation to the lower interest rates that are in fact a new and positive feature of the economic scenario, even though, as many economists have said, this entirely new environment will force all the investors in Brazil to go through a period of transition, since they were used to get higher interests and, thus, much more money quite easily. I am no expert on this (less so in English!), but here is a very detailed report by the reknown newspaper Valor Econômico, about the biased methods of the "financial GDP" in Brazil:


Ms Rousseff's messing with the electricity sector is perhaps the most serious of long range of (basic) mistakes, the very first of which was keeping Mr Mantega in charge as she succeeded Mr Da Silva. In fact, an Argentine-fashioned way of keeping inflation rates forcedly, say, low.

Any resemblance with keeping state-controlled Petrobras from raising gasoline prices is not mere coincidence, of course.

So, maybe it's not the case of talking about a "long-awaited recovery", but perhaps of saying "you ain't seen nothing yet"...

Hank Chinaski in reply to Lauro Sá

"and the Brazilian supports the free press"

That's a lie. There is a substantial percentage of the population, aligned with PT, that thinks a "media reform" should be made. Brazil is on the fast track to become a tropical Stalinist craphole.

" second largest democracy"

That's also a lie.

Brazil is not a democracy. If congressmen are so easily willing to sell their votes, then the people is not represented. Hence Brazil cannot be said to be a Democracy. And let's be frank: PMBD is an ally of the government. In any serious place with minimum respect to ideology that would never happen.

This "second democracy this", "sixth economy that" is just propaganda. On a per capita basis and in several other measurements Brazil is at the bottom of the pile. Nobel Prizes, PISA scores, Transparency International rankings, and the long list of The Great Underachiever goes on and on.

Order and Progress, right?

What a joke hahaha.

YgorC.S. in reply to pedr0salles

Carta Capital communist? You definitely never read that magazine carefully. Carta Capital always publishes reports that are clearly in favor of a certain kind of capitalism, not neoliberal capitalism, but also definitely not communism. I of course know it favors the policies of the PT, but why should it not? The intelectually dishonest Brazilian media likes to say it is totally impartial and without political tendencies, a total and fool lie, of course. At least the likes of Carta Capital and Estadão admit they are pro-this or pro-that, and let its readers know it, unlike hypocrites like Veja or Época.


The two controversial points in this article are the fall in investments and foreign-currency inflows. They are link together any investment always looks for the highest yield and by creating a tax on the flow of foreign-currency Mantega was trying to bring health investments and not predatory investments that are only looking for quick bucks and build bubbles assets like it happen in US and in other parts of the world, but the main point of his policies was to keep Brazil from being attack by an inflow of goods from other countries because right now every country is pegging their currency in one way or another. China pegs their currency, US with feds is doing this for years after 2008 by monetary expansion, Europe is doing , Japan is doing (All the time by their central bank intervention in their currency) even the major automakers in Japan (Nissan, Toyota, Honda..) threat that they would move their production elsewhere because the Yen was too right.
So in this article, I see that what Mantega implement would affect mainly foreign companies in Brazil and outside when they repatriated their profits from Brazil to their home countries or when they try to export to Brazil but in contrast would help Brazilian companies to export and increase jobs. In times like this when bubbles where celebrate as booms anybody that tries to have long term healthy grow is seen as villein or party popper, because the shareholders want it now not in 4 years. So I understand why they want Mantega out if I where in their shoes I would want the same.


Would you invest in a place that takes (´confiscates´is probably a better word) about 50% of what you produce and misuses most of it (wasting it with mostly low-productivity and unsackable civil servants and on outright sinecures plus an absurdly underfunded pension scheme) while giving you almost every reason to doubt whether your investment will succeed or put your money in much less risky places that are readily available and welcome investors?

Besides, the prevailing mentality in Brazil is that investors / entrepreneurs / owners are thieves and union leaders, property takers / real estate invaders and populist politicians, no matter how corrupt, are heroes . This kind of mentality is encouraged and nurtured from the lowest to the highest spheres of the party in power since 10 years ago - the PT.

Want other reasons? Just look at the number of fully paid holidays and the miriad of different taxes on businesses that make Brazil a paradise for corrupt tax collectors and hell for business administrators and owners, the framework of rights and entitlements without duties and responsibilities for employees, the non-functional judicial system, the poor infrastructure and the deficit in trained workers.

All these problems can be solved but it takes politicians with good intentions and guts to tackle them. Dilma probably tries but she´s became president supported by a party - the PT (which became associated with a set of other thief-parties, mainly gangs formed to sack public funds) that is a HUGE part of the problems she must address.


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