Brazil’s mediocre economy

A fall from grace

How to squander an inheritance—and how easily it could be restored

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Live United

Strongly recommended - watch this video!

With the Confederations Cup just kicked-off this weekend, it seems that not only are the government determined to run Brazil into the ground of inefficiency, the private sector has joined in also/

In Recife there are insufficient hotels, so tourists have to stay up to 200 KM from the stadium. AND hotel prices have gone up to Reais 1,000 (US$500 approx) per night!

See Reuters article:

As if that weren't enough, the police have got into the act, just look at this disgraceful video of Japanese tourists with a baby in the firing line of police rifles in Brasilia:

And that's just day 1 and day 2 of the Confederations cup, I can't wait to see what Brazil serves up to its tourists in 2014 and 2016.

...And Brazil wants to be on the United Nations Security Council.

Unbelievable isn't it!

Daffy Duck

How about those riots in Brazil? According to some people here, Brazil is doing is very well, Brazil is the country of the future and yada yada yada. If that's the case, why people are protesting?

Particularly, I hope it's a wake up call. Unbelievable how a country rich as Brazil can provide almost nothing to its citizens in terms of security, infrastructure, education and so on.

Even from a distance, I care about what happens there and nice to see xome people waking up to reality. in reply to Daffy Duck

When you promise dreams and delivery reality people get disappointed. Since I was born everyone talk about Brazil´s potential and some people believe that we are able to develop that potential working less than others.

Parelhas RN

Quote from Margareth Tatcher to Dilminha and Lulla "paz e amor":


Parelhas RN

Dilminha "paz e amor" is lost like a blind drunk person in a shootout. She recently created another social welfare program (increasing even more public spending - which is already one of the highest in the world as the percentage of GDP) dubbed "Bolsa Sofa" for the purchase of furniture and appliances at the expenses of tax-payer money, when all the normal and reasonable people were expecting cuts in public spending.

This is an unsustainable model.

Quote from Margareth Tatcher: The problem with socialism is that you eventually run out of other people's money.


Braziltemptation, or should it be BrazilRetardation?

I was going through your post history and noticed all your posts older than a month ago of you talking about how perfect Brazil is with no chance of economic problems among other lunacies are gone. I guess a year from now when Brazil is in recession you will be here again blaming a foreign conspiracy with your current posts of an unbeatable Brazil gone too?

About half of your posts on the site are of you accusing England and the Economist of conspiring against Brazil and that Brazil is a unstoppable juggernaut which will overtake all the countries in the world any moment now. You are either delusional or a paid stooge for the government. in reply to MechanizedCow

If you exclude the retardation on your first sentence,I agree with you 100%.

It is very normal to blame "the foreign conspiracy" in Latin America when things start to go wrong. So what do they mean by that? That the Latin America countries are poor weak countries that can be affected and manipulated by the big western powers? C´mom. If we spend less time blaming the other and more time working on our problems we would improve enormously. The ones who blame the others does not want to take responsibility on their acts.

MechanizedCow in reply to

typical latin behavior:

- deny reality and facts. instead use emotions (1 murder in your country is just as bad as 1000 in mine!) and hearsay (my friend went there and said we are better) as validation

- anyone who disagrees is part of a conspiracy either of the elites or of foreigners wanting to "steal the good things in the country"

- lie and manipulate and if caught say its ok because most certainly the foreigners (enemies) do the same

- never take responsibility, if you are in charge (like PT in power) and something is wrong its either the conspiracy causing it or nothing is wrong, deny reality

- never follow rules: either you should break rules because you had a hard life of suffering or you you can break rules because you are one of those fighting for socialist utopia bringing heaven on earth to the "povo" therefore you deserve a break

- hypocrisy between action and belief, bad mouthing developed countries and wanting to live there, bad mouthing the excesses of capitalism and consuming irresponsibly

- never tell/admit what you stand for. if you dont admit what your beliefs are you cant be criticized and we all know how latin people react when it comes to criticisms in reply to MechanizedCow

I am sorry but your comment above are racist and full of prejudice. I am Latin and Brazilian and I feel offended when you say that is the typical Latin attitude. So does it mean that when you know a Latin will you expect all of that from him/her? I believe you should not generalize like that. If you want I can introduce you to some of my friends and I can guarantee that your views will change. All of them are Latin by the way.

Although I'd be a fool, with my head stacked on the sand by not recognize Brazil's has some serious work to do to get their economy back to moderate growth.

I think you a a jaded limey. Frustrated because Brazil's economy is ready to overtake England. Brazil needs two good year of steady GDP around 5 per cent growth, to put your country behind - and you can't stand that!

Move over. Your days of pillaging other countries wealth are gone. Brazil will get it's act together. Unlike your country who has long existed by taking from others in order to survive. Brazil has everything one needs to live, plus we have the thecnology and knowhow at our disposal.

zzzzzzzzzzzz who's talking about England?

The topic is about Brazil. Of course, Brazil's GDP will be larger, look at our size and population!

The truth is: we are behind them in terms of GDP per capita, IDH, literacy rates and so on.

In order to grow up, to mature as citizens, we need to learn to accept criticism.

Why do you take it so personal? How do you know he is English? Why are you attacking the UK?

No one here questioned Brazil's potential. I am Brazilian and very often it is not easy to see my country being criticized but we should always hear it and see how we can improve. The attitude of criticize who criticized you is quite childish. Other attitude that I mislike is to put the blame of our country misfortunes on the external powers (US, UK...). Once more I ask, was Brazil a week and silly country that everyone could steal from? The answer is NO! If we were stolen somehow you can be sure that is because some Brazilian gave the external powers the opportunity to do so. Everyone who is Brazilian here please support the district vote system! Voto distrital!

Live United in reply to


I am a European and I recognize what MechanizedCow is saying. I know individual Brazilians also who don't fit the category, but too few to make a difference.

We have people in Europe too who match MechanizedCow's description and guess what part of Europe they live in.... yes the Latin part.

I am sure he wasn't being racist, he was just pointing to a very characteristic feature of public engagement. I see it all the time.

If you don't like that charachteristic which he identified, you can always lead a campaign to change it. That might get better results than shooting the messenger or even accusing the messenger of being racist. in reply to Live United

I did not try to shoot the messenger, I just did not agree with his text pointing stereotypes. Stereotypes are the first step to racism. It is easy to stereotype Germans as Nazis and British as imperialist buccaneers but I believe we should always look forward instead of carry stereotypes.

So you believe that only latin people deny the facts? So what would you say about Gordon Brown denying the fact that the public finances in the UK were out of control? What would you say about the Swedish government denying that the lack of integration is not a problem? What would you say about the German government denying the extend of the financial crisis?

Regarding the conspiracy theory, this is generally used by the left not only in the Latin countries but also in China, Middle East and other developing regions, including the USA lately (regarding China).

Lie and Manipulate - is there an exclusivity of the Latin countries? Does the American, the British and the developed governments manipulate?

Never take responsibility - unfortunately this is a consequence of the democracy around the world. Gordon Brown does not feel he was the responsible for the crisis in the UK. He denies it!

Never follow the rules - this is certainly done more in the latin countries but it is very common in europe as well. How many countries comply with the European Union rules? I can tell you even countries like Austria did not.

Hypocrisy between action and belief - Europe and the US believe everyone should be free to express themselves and they impose this around the world as if they know what is better for everyone

Never tell or admit what you stand for - I do not agree with Hugo Chavez, Rafael Correa or Evo Morales but for me it looks very clear what they stand for.

I do not want to deny that we have problems because I know we do. Our society is still developing (maybe) in a slower pace than it should due to some specifics like lack of education and the inequality. But put the blame of the under development on our race (Latin) is unacceptable.

As you are an European I am not sure if you know Brazil´s previous president Fernando Henrique Cardoso. In case you do not, please try to read about some of his work. He was elected and reelected. He is the opposite of what Mechanized Cow wrote. I suggest you as well to look closely to Enrique Piñeda in Mexico, the Chilean government and the Colombian one.

Live United in reply to


Firstly, its such a change for someone to disagree and engage in a civilized debate on these pages as you have done, sadly, especially when the subject is about Brazil.

Firstly, you said "I am sorry but your comment above are racist and full of prejudice", so you attacked MechanizedCow accusing him of being a racist. This is what I meant by shooting the messanger, which you did.

Secondly, just because you believe stereotyping is the slippery slope to racism, doesn't make it so.

There is an enormous difference between stereotyping (which is generalizations) and racism (which is abuse).

In fact Racism is illegal, whereas stereotyping isn't.

You responded to my comment with the Gordon Brown comment, well he is a politician trying to save his reputation, he wasn't successful, as the British electorate voted him out of his job at the first opportunity, so hardly a prime example of stereotypical behavior.

In fact you responded to the stereotyping by offering exceptional behavior of each nation's example you offered, hardly an argument against stereotypical tendencies across nations.

Take 1 country, Brazil, I am sure you would agree that there are enormous differences between Rio Grande do Norte and Rio Grande Do Sul. But why is this, has it something to do with the tendencies of the population which lives in each place.

Bizzinga! There you have it a generalization, I am absolutely certain that 100% of the population in each Rio Grande are not all exactly the same, but tendencies become stereotypes.

There is nothing wrong with stereotyping for a generalisation. But out and out racism if offensive and illegal.

So you tried to shout down MechanizedCow's comments by accusing him of illegality "RACISM".

Sadly you fell into the trap of being an off
ensive racist yourself you wrote:

" It is easy to stereotype Germans as Nazis"

No it's not, Germany has laws which are very actively enforced which prohibit Nazism. In fact the swastika is an illegal symbol in Germany, much to the sadness of Hindus.

No country on this planet proactively imprisons and prosecutes Nazis as does Germany.

So your comment " It is easy to stereotype Germans as Nazis" is not in the least stereotypical, it is downright racist!!

Here is the Oxford English Dictionary definition:

[mass noun]

• 1a widely held but fixed and oversimplified image or idea of a particular type of person or thing:the stereotype of the woman as the carersexual and racial stereotypes
• a person or thing that conforms to a widely held but oversimplified image of the class or type to which they belong:don’t treat anyone as a stereotype
• 2a relief printing plate cast in a mould made from composed type or an original plate.
[with object]
• view or represent as a stereotype:the city is too easily stereotyped as an industrial wasteland in reply to Live United

Don´t you believe that MechanizedCow comments as the typical behavior of a Latin america put the Latins as inferior to the other races? According to your citation of the dictionary "the belief that all members of each race possess characteristics, abilities, or qualities specific to that race, especially so as to distinguish it as inferior or superior to another race or races:theories of racism". I believe this paragraph just prove my point. He stated there that just by being Latin you can expect that typical behavior. This is racism. Stereotype is not about races as it says in the text you wrote. At the moment you start to separate people by race, the stereotypes become racism.

I did not shoot the messenger. I was just giving my point of view. I did not do any personal attack. I just stated that in my opinion his comments were full of racism and prejudice. If I had attacked him on a personal level I would be shooting the messenger. You disagreed from my comments as well and I completely understand it.


"Brazil, Land of the Future; and it always will be"... in reply to Garaboncias

I do not agree. If we all think like that this saying will become a reality. If we all start to engage somehow it will not. We are completely able to do anything we want. I believe Brazil is the country with the biggest potential in the whole world. We only need to gather the ones who want to make the country develop and work together. The internet will enable that. We can be few and sparse today but we will find a way to get together in this vast country and make it happen.

MechanizedCow in reply to

I think Brazil will only change when the culture changes. The educational system brainwashes people of all ages to believe statism is the solution and capitalism is the devil. Even if a person studies economics in a Brazilian university he will only learn about Marxism and at best Keynes. in reply to MechanizedCow

The educational system is barely able to teach, how will they brainwash? It is true that most o the Economics courses have a leftist inclination but this is a consequence of the military dictatorship. In the future all of them will be right wing due to the current government (if it stays in power for another 2 or 3 terms)

MechanizedCow in reply to


Right wing as in free market capitalism or fascist state capitalism ala miltary juntas in South America or Mussolini's Italy? Both left and right in latin culture always accept the omnipresence of the state in the economy, the only thing that differs is who gains - with the left supposedly its for the masses and with the right the traditional elite families.

No one defends the free market with a limited government so i doubt that "In the future all of them will be right wing" means free market or limited government.

Garaboncias in reply to

Thank you for having illustrated with a very good example the quotation above. By the way, it was Stefan Zweig, who in 1941 voiced that observation - with which you seemed to have taken issue in 2013, seventy-two (72!) years later. What better confirmation of the genius of Stefan Zweig; and the accuracy of his observation?...


Driven by the expansion of the malls, the growth of the luxury market and the increased consumption of the new middle class in the country, Brazil has been elected for the third consecutive year as the most attractive country for retail investment.

The classification considers 24 variables evaluated in four areas: country risk (economic and political stability); market attractiveness (potential retail sales per capita, urban population size); saturation (if there is a lot of competition from international companies) and the criterion "time pressure" (evaluates how fast the market grows and urgency of investments not to "lose" the best time).

The result is indicated in A.T.Kearney consultancy report, which, since 2002, produces the ranking of the global index of retail development, which measures the preference of investors for large firms in relation to world economies.

Even with the recent downturn in the economy and lowering the note given to Brazil, the consultant considers that investments should continue to rise over the next 3-5 years.

Of the 30 countries ranked on the list this year, seven are in Latin America: Brazil, Chile (2nd place), Uruguay (3rd), Peru (12th), Colombia (18th), Mexico (21) and Panama (22).

The ranking analyzed data from 200 countries. in reply to Braziltemptation

Consumption does not mean development. There are only to ways to make a country improve economically: increase the productivity and improve the exports. Brazil is stagnated in the first and is worsen the second. The expansion of the luxury market is based on debt and this is not sustainable in the long term. We should not take the ranking you cited as an improvement. Most of the money spend on luxury goes abroad worsening even more our trade balance.

Braziltemptation in reply to

I disagree. There are several conditions for the growth of a country, and domestic consumption is just one of them. And this is not only true for Brazil. Look for EEUU, as example. As for the luxury market, this is only one component of the research, and neither is the most important. Much more important is the increased consumption of the middle and lower classes. That means more investment, more production, more jobs, more taxes and an increase in GDP. Or do not you think this is important?

Let's not forget that you justified Brazil as being the country of the future as:

"O Brasil não é apenas uma democracia, somos uma das maiores democracias do mundo. Somos pentacampeões no esporte que vocês inventaram, e vocês NUNCA SERÃO!!!


Beat that!

Who else needs literacy rates?

Shopping malls and world cup titles is all it takes.

Soon enough they Brazil will even have a permanent seat in the Security Council, because you gotta respect 5 world cups!

Daffy Duck in reply to

Good point.

Brazil needs another economic model other than consumption. The number of Bra families in default is the highest in history. At the same time, productivity has decreased over the last 30 years (of course, we don't educate our people well, how can we expect an increase in productivity).

In order to export more, the Bra industry has become more competitive. Complicated... in reply to Braziltemptation

Domestic consumption is undoubtedly a way to increase the GDP but it is not sustainable in the long term. When the industry does not forecast a sustainable long-term grow they will not invest. Companies will not increase their capability if they believe the spending is growing in an unsustainable way. What is happening in Brazil now is that the government is encouraging the consumption and a big chunk of it is going abroad. (in the United states Brazilians are known as walking stimulus packages). The other part of it is enough to fill up the spare capacity of the industry. No company will invest in Brazil now because the growth is not sustainable, the labor costs are too high and the bureaucracy (tax system, labor laws, environmental laws...) is too much. I am not even considering the infra-structure. Once more, this policy of increasing the GDP with consumption and debt does not bring sustainable growth. We learned that in Europe. What we need is to increase productivity.

Braziltemptation in reply to

The least I can say about your comment is that you are very misinformed about what is happening in Brazil and especially in the Brazilian economy. But this seems to be the keynote in most comments in this magazine ... in reply to Braziltemptation

I can guarantee I am not misinformed. The sector that have been growing the most in Brazil is agriculture and it is focused on export. The industry have been steady and the commercial deficit have been increasing. Our industry are not competitive enough to export anymore (just a few are). As you are more informed than most that write hear I would like you to put some data here showing that the increment in the consumption was followed by an increment in the production of Brazilian companies.

Daffy Duck in reply to

Good point,, I like your comments. Keep them coming.

Yes, we need to increase productivity. For example, according to IPEA (Institute of Applied Economic Research, in Portuguese) over the last 30 years, worker productivity in the manufacturing industry in Brazil has fallen 15% while China's has gone up by 808% over the same period.

And the way to increase productivity is through education. Brazil has an amazing potential, but it will always be an underachiever because it doesn't provide good education to its people.

I guess it's interesting to the crooks in Brasilia to keep an uneducated population ...

Braziltemptation, stop saying bullshits, and read a serious newspaper as THE ECONOMIST more carefully, open minded, any blind can see that our economy is about to slump. The prices of the things are becomes day after day unpayable, I distrust you are one more of that who makes the govern propaganda. In a way or another, we'll be fatally swalled by this bad managing.


I am Brazilian and I have been living overseas for quite awhile. I follow Brazilian politics/ economy and as a Brazilian I do have plans for the future like going back to Brazil. I agree to a certain extent with the comments of this Magazine. It is hard for investors to understand the Government Strategy surrounding the economy in the mid/ long term. If they could at least explain their thoughts for the long term that would be great, but what we have seen thus far was a series of short term decisions to steer the helm whenever there is (a potential) external shock.
I do not think that the Government is wrong in trying to stimulate the economy by increasing spending, but of course, if this is not yielding to positive results anymore the strategy must be changed. Surely, government spending should be done with cautious since overspending is bad news if it passes the threshold. In this case, the government not only surpassed the threshold but has been irresponsible and lacks a comprehensive economic agenda. What Lula did in terms of getting 30M out of poverty which really means have 30M to consume fueled the economy, but this was achieved using public funds. This cannot go forever.
The Brazilian industry is far from being competitive so growth can only be achieved either by having a strong internal demand (Brazilians are in debt so it is unlikely) or stimulate exports or a combination of both or more preferably engage to the reforms needed to turn Brazilian Industry more competitive.
The problem is that the Brazilian tax system is something that the Government wants to hang on. The government is trying to grow the economy by making short term decisions which will yield no results. The reforms will reduce the Government revenue so it is easier to change tariffs by the issuance of executive decrees for foreign products and domestic sectors. Let's face it, the government relies on these taxes revenues and will not be willing to let it go through reforms. So what's left ? Make short term adjustments.
If Manteiga believes that having a weaker real will help he is wrong, Brazilians are taking the toll for such policies and cost of living is pretty much unbearable these days in Brazil. Salaries went up because of inflation but let's think about it it is becoming increasingly expensive in cities like Sao Paulo to make ends meet.
With that kind of scenario, I wonder if I will ever return to Brazil.
So what's the solution ? Cut spending where you can and invest in infra where you can. Do the reforms. As to the foreign exchange the government should attack the sectors that are increasing prices, it is not acceptable that with a 8% prime rate we have such level of inflation nowadays. They gotta do the same work Fernando Henrique did with all sectors to curb inflation. If they do that hopefully things will get better.


Unfortunately we Brazilians have 80% of functional illiterates, it means those who read but do not understand, including government leaders who do not pay attention to the recommendations of this respectful magazine.

vlins in reply to guest-lieemmo

That is why Brazil will never change. We still have a lot of people that assume every foreign's advice is superior, we should just bend our knees to them, do everything as they schematize... Therefore, Brazil do not need more than "functional illiterates" in government if it is just to "pay attention to recommendations of respectful magazines", in regard to economic policy, to ape rich countries (or better stated, what they want us to ape) or to follow ipsis litteris economics manuals.


I'm so disappointed about our government. Our former president - FHC (Fernando Henrique Cardoso) left the country in a very good shape for his successor. But all the Workers' Party (PT) knows is how to spend money with no solid gain. Every single allied member has increased his/her private assets, getting richer and richer. Nothing, from the very beginning was accomplished.

I have no doubts they (PT) are planning to stay permanently in the highest political power until everything on their way be destroyed. None should expect decency, respect and integrity from them.

God help us to sweep off those parasites.


I absolutely agree with the article. The Government has been destroying our possibilities of becoming a great country. There is no direction. All they care about is spending, spending and spending a little bit more. They spend too much and with no quality. It is time to change directions before it is too late.


Dear sir, congratulations for the article. Criticism should be always welcomed, even more when it comes with inspired British sense of humor.


Hi all,
What's behind this news? In another words who is paying for that publication? A little more clear, this writer was motived ($) by someone that would like to make money change the Brazilian economy direction....the situation here is not so easy as mentioned...

Daffy Duck in reply to JefSouza

You don't get it.

It's all part of a colossal conspiracy involving the Brazilian elite, the UK, the US, Japan, China, the European Union, the rest of Latin America, The Economist, Diego Maradona, Chaves, Seu Barriga.

They are all jealous of Brazil and its amazing growth, its world class infrastructure, its low taxes, its well-educated population, and so on.

However, we have Xuxa, Didi Moco and caipirinha. Chupa Inglaterra!


Dear foreigners, I apologize for (most of my) my fellow Brazilian's lack of politeness and absolute refusal to listen to any foreign negative commentary on the country. We are a culture heavily based on pride, and will greatly appreciate any positive comments on Brazil by international press. The "Brazil Takes Off" cover was seen as an almost absolute approval of Brazil and its government, and most Brazilians were very proud of being the cover story.

But when those comments are negative, we will scream "how do you have the right to criticize us" or "you have no credibility". Mixing that with a general lack of proper internet education, results in the aggressively defensive comments you see here, usually from the same people who loudly promoted the positive comments detailed above.

So please disregard the trolls and ruffians, but also keep in mind that not all Brazilians are like that.

A concerned Brazilian.

Daffy Duck in reply to Uirauna

In my opinion, education is the key to solve most Brazilian problems. With a good education, we learn how to analyze things, we develop critical thinking, we become better citizens.

Some of the comments here clearly show this lack of analytical skills. It shows how poorly educated we are. I am pretty sure we were all happy when this magazine praised Brazil back in 2009. Now, our numbers don't look good (low growth, inflation, increasing gov. debt) and we prefer to attack the magazine with some absurd and pathetic "arguments".

Well said sir,
Another concerned Brazilian

lularapio in reply to Daffy Duck

Some Brazilians are well educated, hardworking and honest. Unfortunately they are vastly outnumbered and do not have the power to do anything about the sad situation of their country except leaving it.

MechanizedCow in reply to lularapio

" We are a culture heavily based on pride"

This over reaction when criticized by outsiders reminds me of France:

"Nevertheless, France is routinely offended by criticism from abroad, especially coming from Germany. It is precisely this combination of sensitivity and heel-dragging when it comes to reform that other Europeans find worrisome."

Heavily hierarchical countries with anti-individualist, anti free market culture seem to have this trait in common.


The only good advice is: take no advice from the gangster bankers' organ, The Economist.

Hank Chinaski in reply to DAULATRAM

But did you feel "sou brasileiro com muito orgulho com muito amor" when The Economist published the "Brazil Takes Off" edition?

You did right?

So, then bankers were good, now they are bad.


I bet your logic is taking you really far!

Have a happy life paying ridiculous taxes for nothing in return. All banker$' fault right?




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