Miriam Leitao at PostGlobal

Miriam Leitao

Rio de Janeiro, Brazil

Miriam Leitao is a reporter and columnist for O Globo and Radio CBN in Brazil. She is also a commentator on Globo TV Network and runs her own blog, www.miriamleitao.com, hosted at Globo online at www.oglobo.com.br. She was awarded Columbia University’s Maria Moors Cabot Prize in 2005. Close.

Miriam Leitao

Rio de Janeiro, Brazil

Miriam Leitao is a reporter and columnist for O Globo and Radio CBN in Brazil. more »

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Brazil's Hard-Fought Economic Dreams

Brazil has a better chance than most of escaping the global grip of a U.S. recession – but we’re still worried.

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All Comments (9)

Carlos Alberto:

The USA is in very hot water. The US actually broke, bankrupt. They are going down and they want Brazil to go down with them.

The US can not stand to see a country like Brazil do well because if Brazil does well then that means that the US government will have little leighway to exploit Brazil and that is bad news for the US lobbiests.

Brazil is extremely rich in natural resources and the US isn't. The US is frightened of Brazil's potential and now the US is getting just a slight taste of that potential. Can you immagen when Brazil realizes it's full potential?

Brazil will make the US look like a poor country!
Brazil will soon realize this potential ( It already has) and the US will do everything in it's power through mass media to deprive Brazil of this potential but Brazil is aware of this US strategy.

US media and lies will not change Brazil's forward path. Brazil is not the USA's backyard, never was and never will be!

Anonymous:

The USA is in very hot water. The US actually broke, bankrupt. They are going down and they want Brazil to go down with them.

The US can not stand to see a country like Brazil do well because if Brazil does well then that means that the US government will have little leighway to exploit Brazil and that is bad news for the US lobbiests.

Brazil is extremely rich in natural resources and the US isn't. The US is frightened of Brazil's potential and now the US is getting just a slight taste of that potential. Can you immagen when Brazil realizes it's full potential?

Brazil will make the US look like a poor country!
Brazil will soon realize this potential ( It already has) and the US will do everything in it's power through mass media to deprive Brazil of this potential but Brazil is aware of this US strategy.

US media and lies will not change Brazil's forward path. Brazil is not the USA's backyard, never was and never will be!

Maurizio Maccani:

Brazil has a big amount of reserves, low inflation and relatively good GDP growth BUT is unable to lower his internal interest rate (the forecast is 12.5 by End Of Year or 8 points over inflation).

On the short term Brazilian economy is protected from USA turmoils, but Brazilian growth is extremely fragile and is due more than anything else to: an increase of personal credit that, at 12.5 % interest rate is very difficult to sustain; increasing commodity prices.

If growth slow down, as is more than likely because of the crisis, public debt that is kept under control ONLY by the fantastic growth in fiscal revenues of the last years, will spiral out of control, at this point the 2 base weakness of Brazilian economy:
1) LOW Investment in infrastructure
2) VERY LOW investment in education
will play a role delaying Brazilian growth for another decade.
All that may be avoided lowering spending and keeping interest rate under control (maybe risking a little bit more inflation) but it seems that neither the government than the BC are willing to do so

In other words, Brazil did maybe too well his homework in financial stability forgetting that this is only one part of the equation.

Pedro M. Granaforte:

A lot of Brazilian's recent economic upgrade has to do with the raise in commodity prices that were driven by solid demand from China. It has enabled the country to acumulate historicaly high levels of foreign reserves as well as it could sustain its hot internal demand through more imports without the cost of even higher domestic interest rates. Commodity prices' and China's responses to America's business melt down are key for the next pages in Brazil's economic history.

When I hear that the greatest fear in China is high inflation, I feel more confident about our chances. There wouldn't be inflation talks up there without the belief in stronger demand. If instead recession comes to play a major role in China, inflation levels shall drop allowing the very low debt issuer Chinese government to raise its investments as an anti cyclical policy. In anyways, China seems to be ready for the storm, and so should be Brazil in some ways. More than a statement, this is a theory I would like to place in this forum.

On the other hand, whatever mess that goes on America is bad news for us, since a lot of our international clients are countries with either high foreign accounts exposure or high levels of public debt. These countries will need to manage lower imports and/or their treasuries won't be in conditions to sharp public expenditures as a response to crisis. So, the deeper is recession in America, the bigger are the challenges in Brazil and other countries.

serraj:

what about the rising commodity prices? will this worsen inflation? Brazil is moving towards the biofeul thing and is allocating corp land for it, and this will eventually worsen the inflationary pressure.

Uziel Nogueira (uzieln@iadb.org):

I think Miriam has touched important points related to resilience shown, so far, by the Brazilian economy in face of the slaughtering going on in Wall Street for almost ten months. The question is: (a) It is pure luck, i.e., will Brazil succumb, sooner or later, to the US contagion? or, (b) Lula's administration has made a quantum leap in economic management that makes contagion highly unlikely. My view is that Lula's cautios macroeconomic management made contagion less likely for two reasons: First, Brazil's financial system is sound and not loaded with exotic financial instruments such as subprime paper; (b) Brazil's export markets are well diversified and not rely heavily in the US. In other words, a slow down of world trade is the only "hard" channel that can affect (not much) Brazil's economic performance.
However, I would like to mention two areas in which Brazil can take advantage of the current crisis: (a) to atract FDI and portfolio investment. In other words, a sort of reverse flight of quality may occur, with investors shunning the US and looking for better returns in other places such as Brazil, for example; (b) Brazil consolidating its economic position in South America through MERCOSUR, including Venezuela.
Finally, as one school of thought teaches, analyst must --from now on -- start thinking out of the box in order to understand the following: Why the US does so badly while the rest of the world does so well?

Caio Villela:

Hunky Santa, you are so wrong on every account!

From Wikipedia:
According to the U.S. Department of Homeland Security[44], the countries of origin for the largest numbers of illegal immigrants are as follows:
Country of Origin Raw Number
Mexico 5,970,000
El Salvador 470,000
Guatamala 370,000
India 280,000
China 230,000

Brazil doesn't come even close to the top as far as illegal immigration.

What does the deforestation of the Amazon has to do with Brazil weathering better an American crisis?

Gas from Bolivia? Brazil will be completely independent of gas from anywhere, with the new discoveries in the Bacia de Campos, in a matter of months.

Multi-billion dollar foreign debt? Mirian states that the reserves are bigger than the debt. The country has a very sound financial standing at the moment.

I agree Lula is a disappointment in the sense that he was supposed to take more social measures, and he turned out to be another Fernando Henrique.

Hunky Santa:

If Brazil is doing so well, why is there more unemployment and violence than ever?

You didn't mention its environmental disaster in the Amazon, chronic gas shortage which makes it begging for more from Bolivia, and its multi-billion dollar foreign debt.

Did you know that Brazilians are, after Mexicans the second most mount of illegal immigrants that cross into the US?

Actually, Lula is a disappointment.

Paulo:

While our president Lula continues to believe we are protected from this crisis, and do nothing about it, I can only agree on how sad it WILL be when the it affects us.

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