Editorial do Financial Times, Brazil’s economy: go-go to so-so

O editorialista do FT tem toda razão: demitir o Guido Mantega e colocar em seu lugar alguem com uma visão da economia "market-friendly traria grandes beneficios, mas como ele reconhece isto somente deverá acontecer depois da eleições. Alias, criticas da midia internacional simplesmente ajudam a mante-lo no cargo, já que nenhum governo aceitaria correr o risco de ser acusado de fracote na defesa da honra nacional. Já vimos este filme, quando Berlusconi foi duramente criticado pela The Economist.

It was a horribly public Freudian slip. Last week Brazil announced $19bn of budget cuts designed to shore up the country’s sagging credibility among investors. But during the presentation, the planning minister accidentally called President Dilma Rousseff “President Lula” – her charismatic predecessor who governed the country when it could seemingly do no wrong. Although the mistake was laughed off, it said a lot about Brazil’s transformation from a go-go country into a so-so.

During the boom years, when Mr Lula da Silva was president, Brazil grew on average 4 per cent a year – and in 2010 racked up an impressive 7.5 per cent spurt. Now, by contrast, its $2.2tn economy is teetering on the brink of a technical recession. Worse, nobody sees where future growth might come from. Brazil is even considered one of the “Fragile Five”, a group of countries considered particularly vulnerable should the US Federal Reserve increase interest rates.

Domestically, the country’s consumption boom has run out of steam. Low investment during the boom years has revealed itself as a series of growth-crimping supply bottlenecks. Externally, softening commodity prices have opened up a potentially worrying current account deficit. Equivalent to 4 per cent of gross domestic product, it is covered by foreign investment flows. But for how long? Private equity groups are just the latest investors to pull in their horns.

Ms Rousseff inherited some of these problems from her predecessor. Others stem from the worsening global environment. Yet as she approaches the end of her first term, many are of her making too.

A series of tax breaks and other “supply-side” measures designed to boost industrial production only widened the budget deficit, which was then fudged by creative accounting. She encouraged the central bank to cut interest rates, which stimulated the economy but also increased inflation. In addition, lower rates weakened the currency, which was much needed but provided another inflation boost. Combined with a bossy-boots, Dilma-knows-best style, the end result is that Ms Rousseff and her administration have lost credibility in the eyes of investors, and just when times are getting tough and she needs it most.

Still, all is far from lost – and that is not only true about the Brazilian soccer team’s chances in the World Cup. Almost everyone, in government and outside, agrees that the economy needs to change. The real question is how?

One constraint is October’s presidential election. Ms Rousseff’s popularity has recovered from last year’s street protests and she remains the favourite to win. Nonetheless, most believe she will postpone tough decisions until afterwards. (Few believe Brazil will achieve the mooted budget cuts as the cost of energy subsidies soars due to a long drought that has drained hydroelectric plants.)



Another way is to push ahead with Brazil’s ambitious infrastructure programme and boost growth that way. Yet while some projects now offer investors attractive terms, many others are languishing: an upgrade to São Paulo’s main airport has so far only led to a new car park. Lastly, there is the sheer unwieldiness of Congress. Ms Rousseff, a stern technocrat, lacks Mr Lula’s ability to cajole and push unpopular measures through.

All of this brings her back to square one. How to rebuild credibility? At least the central bank has been given free rein to boost interest rates to curb inflation, while Ms Rousseff has marketed the country, emphasising her commitment to low inflation and fiscal probity. The easiest way, though, might be to shake up her team. Guido Mantega, the finance minister, has long lost investors’ regard. Replacing him with a market-friendly candidate could do wonders. Alas, that is likely to be postponed until after the election too.


Fonte: FT