f_0016625_14367 - Brazil Bright Prospects or Dark Portents...

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Brazil: Bright Prospects or Dark Portents? by Matthew M. Taylor B razil is an island on its continent, separated from its neighbors by an ocean of history, culture, and language. And yet whither Brazil, so too Latin America. The country accounts for a sixth of the region’s trade, and more than a third of its GDP and its population. In addition to its large share in all cross-regional quantitative measures, Brazil’s weight is geopolitical as well, with the country playing a central role among leading emerging markets. The state of affairs in Brazil, then, is of enormous concern to its neighbors, and should be of great concern to the rest of the world as well. Sadly, the message of this essay is that there is much for both Brazilian and foreign observers to be concerned about when considering the country’s medium to long-term prospects. This message runs counter to the ecstatic headlines and rapturous investor reports that have dominated much coverage of Brazil since President Luis Inácio (“Lula”) da Silva demonstrated, during his first year in office, that he would not reverse the process of economic stabilization or take a wildly populist policy route. First, consider the full half of the glass. The country has not been hit by economic crisis for more than half a decade now, and all suggests that in the medium term, current policies will shield Brazil from the full-fledged financial panics of the sort that repeatedly hobbled it in the 1990s. Indeed, despite initial fears about the potential populism of the Workers’ Party government that took office in 2003, Brazil has almost achieved investment grade ratings, the debt-to-GDP ratio is at its best place in a generation, Brazil repaid its debts to the IMF well ahead of schedule, foreign currency reserves stand at over $160 billion, hyperinflation remains a distant (but not forgotten) nightmare, the primary fiscal surplus remains above four percent of GDP, and the balance of payments is in remarkable condition. Most importantly, after years in which an uncertain economic tide lifted only the wealthiest ships, inequality has been modestly but continuously shrinking for nearly a decade. On the political front, as Brazil prepares to celebrate the twentieth anniversary of its 1988 Constitution, almost all naysayers have been proven at least slightly over pessimistic. Early concerns about the instability of multiparty presidentialism were clearly overblown, and despite the existence of twenty-eight officially recognized Matthew M. Taylor is an assistant professor of political science at the University of São Paulo. His work focuses on comparative development, public policy, and judicial politics in Latin America. He is the author of
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f_0016625_14367 - Brazil Bright Prospects or Dark Portents...

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