Brazil marches on to global greatness – and that is its biggest problem

Tavia Grant – CTV News, 01/10/2011

All new governments grapple with tough decisions. Few face tougher ones than Brazil.

Inflation in Latin America’s largest economy is running at a six-year high, with food prices rocketing 10 per cent last year. With memories of painful hyperinflation in prior decades, new President Dilma Rousseff vowed that she wouldn’t allow “this plague [to] return to corrode our economic fabric and punish the poorest families.”

The most logical move for Brazil’s inflation-targeting central bank would be to boost interest rates this month. But Brazil’s rates are already among the world’s highest, at a choking 10.75 per cent. Raising them further would not only squeeze borrowers – it could give foreign investors yet another reason to buy its currency, the real.

The real has soared almost 35 per cent since the beginning of 2009, damaging the ability of the country’s exporters to compete. Ms. Rousseff has pledged to protect Brazil from “the indiscriminate flow of speculative capital.” But the surge is enough that Goldman Sachs recently dubbed it the world’s most overvalued currency.

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Enduring legacy of Brazil’s Lula

Paulo Cabral – BBC News, 12/26/2010

Francisco de Souza has just got back home after 17 years away.

Returning was his plan all along since he left the small town of Tiangua, in the state of Ceara, to flee the extreme poverty of the Brazilian north-east.

Mr Souza’s story echoes that of President Luiz Inacio Lula da Silva and millions of other north-eastern migrants who had to leave in search for a better life in the much richer south – and found it.

Thanks to Brazil’s economic growth during the Lula years, many have now the choice of going home with their heads held high.

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It might be time to rebrand it the South American dream

Arianna Huffington – The Huffington Post, 12/23/2010

Yesterday, I wrote about the main takeaway from my ongoing trip to South America — how Chile and Brazil, the two countries I’m visiting, have, on key issues like defeating poverty, transcended the tired division between left and right the United States seems hopelessly mired in.

After my time in Chile, I flew to Brazil, which is in the midst of an economic expansion — the Brazilian Boom. It’s a boom made all the more remarkable because Brazil’s problems were long thought to be intractable: high inflation, high crime rate, high income inequality, high birth rate. As the old joke went, “Brazil is the country of the future — and it always will be.” Well, the future has finally arrived.

The turnaround started with the 2002 election of President Luiz Inácio Lula da Silva, a left-wing, former union activist. When he assumed office, the country’s elite feared a Brazilian version of Hugo Chavez. But he showed himself to be less of an ideologue and more of a pragmatist. “I’m not left or right,” he said. “I’m a metal worker.” Now, as he prepares to leave office next month, he’ll be departing with a popularity rating of 80.5 percent.

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Brazil: The world’s next economic superpower?

60 Minutes – CBS, 12/12/2010

CBS

As the U.S. and most of the world’s countries limp along after the crippling recession, Brazil is off and running with jobs, industry, and resources. Steve Kroft reports.

For decades, the joke about Brazil has been that it’s the country of the future – and always will be.

Despite enormous natural resources, it has long displayed an uncanny ability to squander its vast potential.

Now it’s beginning to look like Brazil may have the last laugh.

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Brazil’s rising ambition in a shifting global balance of power

Paulo Sotero, UK’s POLITICS: 2010 VOL 30(S1), 71–81

Rooted in democracy and economic stability and propelled by President Lula’s extraordinary popularity and assertive foreign policy, Brazil’s recent rise has allowed the country to gain a new global pre-eminence despite its failure to achieve the stated goals of its international strategy. Consolidation of the nation’s place and influence will depend as much on its ability to tackle domestic vulnerabilities, such as low competitiveness and low savings and investment rates that limit potential economic growth, as on its capacity to calibrate ambition to its position in the redistribution of international power under way in the early twenty-first century.

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Special report: Dilma Rousseff, Brazil’s “automatic pilot”

By Brian Winter and Natuza Nery – Reuters, 09/23/2010

JUIZ DE FORA, Brazil – Here’s some advice for anyone who meets Dilma Rousseff (aka “Stella.”)

First, speak quickly. And second, if you’re looking to ingratiate yourself, it’s probably not a good idea to suggest that major reforms are needed for Brazil to retain its title as one of the world’s fastest-growing emerging economies.

In an interview with Reuters, the woman who is almost certain to be elected Brazil’s president in October flatly dismissed the need for big budget cuts or changes to some of the world’s most restrictive labor laws. Asked if it was possible for Brazil to keep growing at a 7 percent annual pace without such reforms, Rousseff shook her head, smiled, and interrupted the question.

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Petrobras gears up for record share issue

By Jonathan Wheatley – Financial Times, 09/23/2010

The biggest share issue in corporate history will be priced later on Thursday as Petrobras, Brazil’s national oil company, attempts to raise up to R$134bn ($78bn) from existing shareholders and new investors.

The company’s shares were outperforming the market strongly on Thursday morning, apparently on expectation that the issue would be significantly oversubscribed.

Petrobras’s board was due to meet at 5pm in Rio de Janeiro to approve the outcome of bookbuilding, under way since September 3.

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