Investment

According to Bloomberg BusinessWeek, Brazil’s foreign direct investment in July reached the highest level since December 2010 and may exceed the central bank’s $50 billion projections this year as investors bet economic growth will accelerate. Foreign direct investment in July rose to $8.4 billion from $5.8 billion in June, the central bank said in a report distributed today in Brasilia. Economists expected FDI of $7 billion, according to the median estimate from 18 analysts surveyed by Bloomberg. Central bank President Alexandre Tombini told reporters last month that foreign investment should “evolve favorably” in the second half of the year. Daniel Snowden, emerging markets analyst at Informa Global Markets, said foreign investors are focusing on government measures to spur the economy. “Investors are more optimistic on the long-term viability of Brazil given the stimulus the government is providing.”

Brazilian Ports

Posted on by Mark Langevin

The Brazil Business’ latest briefing on Brazilian ports is a must read.

The briefing spells out the major challenges and efforts to rectify the obstacles to modernize Brazilian ports for the global economy.

Accordingly, the briefing reports,

Since the beginning of the privatization of the Brazilian ports in 1995, the lessee companies of container terminals have invested approximately USD 1 billion acquisition of modern equipment, physical infrastructure, training of manpower and infrastructure.

 

Particularly after the injection of resources by the Federal Government through the Growth Acceleration Program (PAC), the situation at the Brazilian ports started to improve.

 

Part of the dredging works in the main Brazilian ports are finished. With the sea deeper along the ports’ area, it is estimated that around 30% of the vessels worldwide that could not dock in Brazil before, now can.

 

But what used to be an issue at the sea, now it is an issue at the land. The logistical problems of access are evident, the bottleneck of access from the cargo container terminals generate unproductive periods, which are highly detrimental to the foreign trade and financial activity of Brazil. It is a fact that the rail network and roads in the vicinity of the ports are insufficient.

 

Another great matter about the Brazilian ports is the bureaucracy. Besides making everything more expensive, slowness in the Brazilian ports invented a truly “congestion at sea”. Every ship that arrives in the country waits at least 5.5 days to have the goods delivered by agencies such as IRS, the National Sanitary Surveillance Agency (ANVISA), the Ministry of Agriculture and the Docks. The world average is three days.

 

In Brazil, the organs responsible for clearance of goods run only during business hours. It is the only country among the world’s major economies, which does not have these services available 24 hours.

 

Read the entire briefing here.

 

For more information on investments in the ports of the Northeast region, see the BrazilWorks Briefing paper:

 

Infrastructure Investment in Northeastern Brazil

Book Review: They Don’t Speak Spanish in Brazil

Posted on by Mark Langevin

 

They Don’t Speak Spanish in Brazil:

A Guide to Life, Management, and Taxes for Doing Business in Brazil

By Joseph H. Low III and Cláudia Brito Low

The Don’t Speak Spanish in Brazil is really two books in one, and both are worth the read for different reasons.  The first eight chapters are really a cross-cultural guide to understanding and appreciating Brazil while sidestepping some of its apparent disadvantages. Chapters nine through sixteen along with the appendix and glossary is a well-written second book, more serious than the first, but a readable guide to those exploring the possibility of doing business in Brazil.  Both are worth the read, but it is the second that distinguishes They Don’t Speak Spanish in Brazil from a growing list of “brazil for beginners” type of books and business guides.

In 1987 when I first travelled to Brazil, many in my family assumed that Brazilians spoke Spanish as the authors imply. Today, more and more North Americans know more about Brazil than my parents did, and U.S. citizens are now the second largest group of foreign nationals that travel to Brazil, next to the Argentines.  So, while this book’s title may no longer apply to most readers in English, the thoughtful explanations, vivid reportings, and insightful teachings more than make up for the old school title.

The book is a long brew of all the complicated ingredients that make up what all of us experience as Brazil.  Yet, the authors pull together their experience and insight in chapter one to provide in a nutshell what they then go on to crack open in the following pages and chapters,

“Think of it in terms of a poker game. The Brazilian government is the dealer and they will always-always-have all the cards. If you want a seat at the table, you have to play by their rules and pay the buy in. If you’re going to stay, you have to commit.”

It is this insight and entertaining explanation of experience that makes the first book in They Don’t Speak Spanish in Brazil a fast read, especially for those already planning their trip to one of Brazil’s distinct destinations-like my favorite Ouro Preto in Minas Gerais. This first book works as a collage of the authors’ experiences woven through their cross-cultural sensitivity; and the methodology is as refreshing as an iced caipirinha on a blistering hot day in Cuiabá where I often work.  The authors draw a conclusion about Brazil and then tell a story or two to deliver it up to their readers in the most quenching way.  For example, on page 41 the Lows  explain,

“But here’s the more cultural point: nobody—and I mean nobody-eats lunch at their workstation. A desk and lunch is to a Brazilian what oil and water are to each other—they don’t mix.  Let me relate a story that shows you how important this lesson is.”

I won’t recount the story, but I recommend that you do because it reveals some of the fundamental cultural differences that distinguish Brazilians from North Americans, but in a way that invites adventure and eases the cross-cultural submersion into the delight that Brazil can be.

The Lows certainly highlight the best of Brazil, but don’t shy away from the ugly side either.  They note that Brazil does have a lot of crime, and much of it is horrifyingly violent.  Rather than simply dismissing crime or damning Brazil, the Lows report and then recommend,

“the police note that theives target trade shows, expos, convention centers, and the like because there are plenty of naïve, distracted foreigners carrying laptop bags and presentation equipment. The answer isn’t to avoid the expo altogether. You should take proper precautions. Don’t travel by yourself. Be vigilant about your surroundings. Don’t go into dark alleys. Stay in well-lit areas. Do your best not to appear too much like the tourist you actually are.”

Yes, the first book-the first eight chapters offer a great deal of insight and experience nicely packaged like one of Brazil’s giant chocolate easter eggs made for children and the sweet toothed adult-wow that even works as a metaphor for Brazil too!

The second book, chapters nine through sixteen, are the most readable treatise on Brazilian taxation and corporate structure that I have come across in past years.  There are dozens of guides on Brazilian taxation, from KPMG to Ernst and Young, but They Don’t Speak Spanish in Brazil is the only one that doesn’t require a tank of coffee or an afternoon nap to get through, seriously!  First off, the chapters are focused, well framed and essentially short… a key to high readability on anything that relates to taxation—especially in Brazil where it can get downright complex and confusing even for a tax professional.  I recommend this second book, this collection of chapters to those executives I work with that need to know, but won’t fall asleep trying to understand the decisions they need to make to work in Brazil.  So, for those of you have placed Brazilian taxation and corporate structure on your reading list, but are procrastinating; wait no longer.

Lastly, don’t just skim over the appendix and glossary, these are valuable tools for all of us, even the most experienced brazilianist can learn a thing or two from an appendix that spells out the major business incentives in every state of Brazil’s federated union as well as the glossary of terms-a concise short cut to weaving your way through the myraid of acronyms and terms that any Brazilian business must navigate.

Even if you’re an experienced traveler to Brazil, or often pass through São Paulo for a meeting or two, the book is worth the read; yes you may occasionally disagree with the author’s conclusions taken from their own experiences as reported in the first eight chapters.  For example, on page 88 the authors state the claim that Brazilians “turn off” during holidays and paid time off. Yes, most Brazilians do and for all the right reasons, but Brazilian business people do not always disengage… they all have smart phones and skype, so if you are engaged in a business transaction or activity; don’t be surprized to find your Brazilian counterpart trying to skype you over a matter of business while he or she is on the beach in Guarapari or trading e-mails with you in the airport waiting for a flight to Orlando.  Brazilian business folks now speak English and often know more about ourselves as North Americans than any of us would care to admit.  So read They Don’t Speak Spanish in Brazil, you will learn a lot about Brazil and yourself; a credit to the authors and their subject.

 

Review the book’s website here.

The Recent Development of Brazil’s Private Petroleum Companies

Posted on by Chris Cote


Brazil’s long crusade for energy security, crowned by the discovery of massive offshore pre-salt oil and gas reserves in 2006, and recent stretch for greater geopolitical power now pivot on its success in gradually increasing the production of transportation fuels and natural gas in the coming years and decades.

Leading this national campaign is Petrobras, the federal government-controlled, but publicly-traded energy company that will operate Brazil’s strategic oil and gas blocks in concert with an expanding list of large, private transnationals and nationally-owned petroleum companies.  Almost forgotten in the mad dash to auction off the pre-salt reserves and transform Brazil into an energy superpower are the country’s smaller, private national oil and gas production companies.  These firms must make prudent investment decisions, develop their technical and human resources, and discover the best fit in order to make more than a modest contribution to the fast growing oil and gas sector puzzle.

Certainly Brazil offers an expanding and diversified list of possibilities in this sector, but can the nation’s private national petroleum companies take full advantage before Petrobras, Statoil, Chevron, Exxon-Mobil, and PetroChina among others limit the opportunities for development and growth in the coming decade?

This BrazilWorks briefing paper explores the recent development of Brazil’s private national petroleum companies and analyzes their performance in the recent, 11th round block auctions to provide an understanding of their current role in the country’s oil and gas boom and suggest possible paths toward future development.  The paper features specific analysis of Petra Energia, S.A., Queiroz Galvão, and the controversial OGX to illustrate the recent development of Brazil’s private national companies. Read the BrazilWorks briefing paper here:  The Recent Development of Brazil’s Private Petroleum Producers

Infrastructure Investment in Northeastern Brazil

Posted on by Chris Cote

Infrastructure Investment in Northeastern Brazil

Challenges and Opportunities in a Developing Region

A BrazilWorks Briefing Paper

Prepared by Chris Cote and Mark S. Langevin, Ph.D.

Summary

  • The Northeast region is growing faster than the national average due to a high performing service sector, retail sales, and tourism.
  • Brazil’s current infrastructure deficit is the result of several decades of declining public and private investment.
  • To lessen this deficit, the Brazilian Federal Government has launched two national Growth Acceleration Programs (PACS 1 and 2) since 2007 to remedy insufficient physical infrastructure, especially in the energy and transportation sectors. 
  • Transportation investments focus primarily on road and rail improvements, but the new port concession law should attract increased private sector investment to an expanding list of ports.
  • Public investments in airport expansion are needed to confront the immediate challenge of the 2014 FIFA World Cup and the long-term growth in passengers and the tourism industry.
  • Energy investments in the region are concentrated in oil refineries, thermoelectric plants, wind energy farms, and expansion of the transmission system.
  • The private sector must take a greater role in expanding and improving transportation and energy infrastructure throughout the region to guarantee sustained economic growth.
Read the entire briefing paper here: 

Innovation and Venture Capital Policy in Brazil

Posted on by Mark Langevin

Krista Tuomi and Lopo De Castro Neto (2013) provide an efficient description and comparison of the state of innovation policies in Brazil and South Africa to conclude,

“South Africa and Brazil have the potential to become important world players in innovative sectors. Both countries are not currently living up to their potential, however. Some constraints to growth are structural and/or external, but many of them can be alleviated by a more favorable policy environment (2013:43).”

With respect to Brazil, these authors note that Brazil has made progress through successive policy reforms, increased government investment, and a measurable increase in the numbers of researchers applying their expertise to research and development.  However, the authors note that government authorities are responsible for approximately 60% of all research and development expenditures and that only 26% of scientists are employed in the private sector. Yet, “Innovation and Venture Capital Policy in Brazil and South Africa” does not provide an historical account of precisely how government became responsible for organizing and financing efforts to advance research and technology, rather the authors prefer to focus on those policies that impact the behavior of venture capital in Brazil and South Africa.

Accordingly, the emphasis is upon exactly how the state hinders venture capital formation and its employment for innovation.  In the case of Brazil, Tuomi and Castro Neto document that venture capitalism,

“has made significant advances in the country over the past decade growing from eight VC fund managing companies in 1994 to 180 VC fund managing companies today. According to the sector’s Brazilian association, ABVCAP, in vested capital in 2004 was only $5.6 billion. This grew five- fold to $38 billion in 2010(2013:41).”

They attribute this growth to low inflation and economic stability since mid-1990s, but also point to a number of fiscal measures that provide greater incentives for private sector investment in research and development.  Certainly, economic stability coupled with tax expenditures to subsidize entrepreneurial activities provide important conditions for investment in high risk and potentially high return economic activities, and the authors document that indeed Brazilian venture capital firms have opted for dynamic start up companies over established corporations.  Yet, as the authors note, even Brazil’s venture capital firms required the centralized and often generous hand of government for direction and finance.

If venture capitalism is critical to innovation, then in Brazil’s case, the public sector played a critical role in shaping the evolution of venture capitalism in the national innovation system.  Indeed, Tuomi and Castro Neto carefully document how the public company FINEP, supervised by the Ministry of Science and Technology or MCTI, identified and actively responded to the underdevelopment of venture capitalism in Brazil during the past decade.  Towards this end,

“FINEP decided to address some of the problems with VC capital formation including: small numbers of domestic fund managers; an unwillingness by pension funds to invest in VC; a disconnect between investors and start-ups; and the fact that few Brazilian companies were familiar with VC. As such, FINEP introduced a number of measures aimed at fostering a Brazilian VC culture. First they instigated a series of panels on VC funds, to assess VC funds and provide advice on how to improve. Second, they organized forums with the intention of educating investors, start-up owners and researchers on VC. Lastly, they held training workshops on due diligence and other topics.”

Herein lies the big takeaway from this worthwhile article, if Brazil is to shift the burden of financing research and development upon the private sector, then government must both develop public policies that reward private sector investment in innovation as well as play an instrumental role in shaping capital markets to finance Brazilian firms with competitive advantages that lead to the production of tradable, high valued goods and services.  Will Brazil’s private sector respond to such policies and guidance if the state continues to provide the bulk of research and development financing?  And, what happens if Brazil’s private sector continues to shy away from shouldering such a burden and prefers to opt for state subsidies, either through tax expenditures or favorable interest rates and terms from BNDES?

Read the full article here.

The Brazilian Capital Goods Market: Recent Development and Future Prospects

Posted on by Mark Langevin

Prepared by Chris Cote and Mark S. Langevin, Ph.D.

October, 2013

Brazil is undergoing a rapid transformation from inward oriented national development to a fully globalized political economy whose government is quickly learning how to craft public policies to guarantee economic stability, growth, and an ever increasing list of private sector opportunities. Brazil still faces significant challenges, including stagflation (slow growth with inflation), but the current governing coalition is committed to a sustainable set of heterodox measures to further liberalize the economy while providing significant public investment, especially in energy and infrastructure, to insure continued growth in the coming years. This favorable scenario provides ample opportunities for United States headquartered capital goods manufacturers to increase exports to Brazil, increase investments in Brazilian manufacturing, and deepen and develop strategic partnerships with Brazilian firms and producer associations. These opportunities come with significant challenges; therefore U.S. firms and investors must carefully identify and assess an expanding list of opportunities as well as a resilient set of institutional obstacles, weighing present market conditions with sensible forecasts of future possibilities.

For more information and analysis on Brazil’s capital good marketplace and its import opportunities, read BrazilWorks briefing paper,

The Brazilian Capital Goods Market: Recent Development and Future Prospects here.

Presalt Oil Discoveries and the Long-Term Development of Brazil

Posted on by Mark Langevin

Pablo Fajnzylber, Daniel Lederman, and Julia Oliver of the World Bank recently published, “Presalt Oil Discoveries and the Long-Term Development of Brazil,” a World Bank Economic Premise publication.  Fajnzylber and his colleagues provide a concise overview of the growing importance of oil and gas exploration and production in Brazil and provide several key recommendations that are at the heart of policy discussions in Brasília. Accordingly they conclude,

“Brazil has an opportunity to leverage oil-related innovation as a means to push forward a pro-diversification policy agenda. Growth in Brazilian oil production and exports will likely lead to Dutch disease effects, including an increased concentration of the country’s exports and heightened macroeconomic volatility. To minimize these impacts, the government could improve the conditions for other tradable industries by accelerating the accumulation of human capital and facilitating investments in science and technology. It could address current infrastructure bottlenecks and other legal and regulatory hurdles that limit the competitiveness of Brazilian industries, notably the manufacturing industry.

As the Brazilian government makes new, oil-financed investments, it should ensure that they are of high quality. Of particular importance are improving procedures for selecting, appraising, and evaluating investment projects. The government could also improve its monitoring and evaluation (M&E) systems, which are key to ensuring successful execution and implementation of all public investment projects.

Finally, the government could pace the exploitation of the new oil reserves. While the presalt discoveries could place Brazil on strong footing in the 21st century, maximizing those opportunities may call for moderating the pace at which the new wealth is extracted. Gradualism in the exploitation of the oil reserves can help ensure the quality of oil-financed public expenditures by allowing all levels of government to develop appropriate plans and M&E mechanisms. Slower ex- traction can also buy time for the nonoil industrial sector to absorb positive externalities from related public investments. Lastly, gradualism can help reduce pressures to prevent real exchange rate appreciation.”

These recommendations shed some light into the frustration surrounding the recent stock performance of Petrobras, as it ramps up investment in the pre-salt fields, but disappoints investors seeking quick returns.  As a state controlled company, Petrobras is in the unique, and challenging position of delivering dividends to stockholders who finance investment and public policy that aims to gradually exploit these gigantic reserves to insure broad based economic development.  The pace of exploitation has to eventually achieve some political equilibrium between private investors, policy makers, and Petrobras management.  If Petrobras and its partners show substantial gains in production over the coming years, as well as earnings, then everyone will be happy, but if predictable obstacles and the inherent uncertainly of drilling for ultra deep oil and gas frustrate production, then expect that the politics of petroleum might lead to substantial changes in both policy and Petrobras management.

Brazil in Africa

Posted on by Mark Langevin

Christina Stolte and Chatham House recently published a briefing on Brazil in Africa, Brazil in Africa: Just Another BRICS Country Seeking Resources?   The November 2012 briefing explores Brazil’s rapidly growing engagement with African nation-states, in particular Angola, Mozambique, and South Africa.  The briefing advances the following conclusions:

  • Over the last decade, Brazil has expanded its engagement with Africa, doubling its diplomatic presence from 17 to 37 embassies.
  • New economic partnerships have been forged, raising trade with Africa in the same period from US$4.2 billion to US$27.6 billion.
  • Oil and other natural resources account for 90% of Brazil’s imports from the continent and Brazilian investment is focused mainly on Lusophone Africa.
  • Brazilian policy-makers see Africa’s biggest potential as providing a consumer market for their country’s manufactured goods.
  • Brazil also uses its Africa policy as a means to achieve its foreign policy goal of being recognized as a major power.
  • South–South cooperation is a key driver of Brazil’s Africa policy as it is seeking support for a permanent UN Security Council seat.
  • Brazil advocates South–South cooperation projects that are based on its own development experience. Biomedical and health research and agricultural research have been turned into effective foreign policy instruments.

Chatham House reports that in 2009 some 6.6% of Brazil’s imports came from Africa, mostly oil and other natural resource based commodities while only 3.4% of Brazilian exports were destined for Africa, mostly to Angola, Egypt, Mozambique, and South Africa.  The level of trading is growing, boosted by the increasing investment of Brazilian trans-nationals, including Petrobras (oil and gas), Odebrecht (construction), and Vale (mining).  This engagement, while fundamentally based on African natural resources, is also the result of the international diversification of these Brazilian companies, whose investments in Africa are geared for the long term and facilitated by the Brazilian government and its growing commitment to play a supportive role among many African countries.  Indeed, BNDES, the Brazilian development bank, provides much needed credit lines for infrastructure construction, mostly in Angola, Mozambique, and South Africa.

The report notes,

“Stressing the benefits of their country’s engagement in Africa, Brazilian officials therefore frequently refer to the employment and training that Brazilian firms provide for the local workforce. In Angola, Odebrecht is, as noted, already the biggest employer and Brazil maintains that its approach towards Africa is generally focused on generating development and benefiting the local population. President Rousseff therefore has pledged that Brazilian companies willing to invest in Africa will leave a legacy to the local population by transferring technology, providing vocational training and offering social programmes. Like her predecessor, she is convinced that the Brazilian approach ensuring benefits on both sides compares favourably with China’s.”

Despite the evident increases in investment and trade, the report argues that,

“The intensification of economic ties, particularly trade, over the past decade was driven by government initiatives during the left-wing Lula administration rather than by Brazilian business itself.”

Building stronger ties with Africa and many of its fastest growing and more largest nations provides Brazil with a broader geopolitical foundation for exerting its global leadership as well as a myriad of opportunities for Brazilian headquartered firms who may enjoy competitive advantages, at least with the Lusophone countries of the continent.  Alongside the expanding trade and investment linkages, the Brazilian government has been instrumental in establishing more developmental ties with a broad cross-section of African countries in such areas as agriculture and rural development, rural electrification and biofuel production, the fight against hunger and poverty, health development assistance-including HIV-AIDS prevention and treatment programs among other efforts.

Stolte documents the argument that Brazil’s recent engagement in Africa is constructive, interactive, and mostly serves mutual interests, both public and private.  She notes the rivalry with China’s relatively recent entrance into the continent as well, but falls short of advancing any comparative conclusions.

This briefing is certainly a must read for those interesting in understanding Brazil’s importance in Africa and emerging opportunities for both Brazilian society and its government.

CNI’s 2012 Growth Assessment

Posted on by Mark Langevin

Brazil’s National Confederation of Industry (CNI) issued its Economia Brasileira 2012 on an optimistic, but sober assessment of the past year and immediate future.

According to the CNI, the economic environment is fertile for continued expansion founded upon more favorable exchange and interest rates as well as the government’s recent efforts to reduce production costs through lowered payroll deductions and energy rates for Brazilian industry.  Brazil will grow more in 2013 than in 2012.

CNI estimates that 2012 economic growth will come in at a disappointing 0.9%, only a third of the projected rate forecasted at the beginning of the year.  Industrial output was even more frustrating as it contracted by 0.6% as a proportion of the overall Gross National Product and grew only 2.0% from last year’s output.  Brazil’s industrial stagnation was not only a consequence of the global downturn, but also a result of lower than average investment rates.  At the root of the problem is the low level of investment coupled with comparably low productivity levels in sharp contrast with many of Brazil’s competitors.  Also cumbersome regulation and questionable quality of education have teamed up to drive down Brazil’s relative competitiveness.

Accordingly, CNI suggests that the government needs to double up efforts to improve infrastructure, reduce systematic costs (the Brazil cost), and further promote investment in plant and production.  Industry needs to invest in more innovative production processes and raise productivity to spur on industrial competitiveness and output.

If Brazil makes such changes, then national economic growth could achieve levels of 3-4% during the coming years.

Managing the Downswing in Brazil

Posted on by Mark Langevin

Since Brazil’s amazing comeback in 2010, two years after the 2008 Wall Street meltdown, the country’s growth has cooled off to an average of 2.8% and probably will not surpass 1.5% in 2012.  Brazil’s National Confederation of Industry (CNI) quarterly economic indicator report, CNI Informe Conjuntural Jul-set 2012, paints a sober scenario about present and future growth, and argues that much more investment is needed to retain growth levels of 4-5% a year.

 

CNI expects that the industrial sector will contract by 1.9% in 2012, despite its recent rise in activity during August and September and likely strong finish for the calendar year.  The service sector continues to grow, holding up the economic ship behind annual growth of 8.8%-stemming from mounting consumer demand backed up by the expansionary policies of Brazil’s federal government and Central Bank.  However, investment remains locked down to approximately 18.7% of the Gross Domestic Product (GDP), and the country is now in the fourth consecutive quarter of falling investment levels.

 

Exports have also evaporated as China curbs its appetite for Brazilian iron ore, Europe chooses to fast its way to fiscal stability and recovery, and Argentina carefully weeds out Brazilian exports to save its precariously positioned industrial sector.  Making things worse, prices have generally fallen for Brazilian exports, driving down investment in those key export sectors of the economy, including the aviation company Embraer. The bright side is the continued United States demand for Brazilian products, growing 11.7% in the first eight months of 2012.

 

How is Brazil managing the global downswing that has placed a damper on its industrial development and aggregate growth?

 

First, the Brazilian Central Bank has engaged in monetary defense to modestly depreciate the national currency, the Real, so that Brazilian exports retain some sense of competitiveness in relation to the strategic downsizing of Chinese and U.S. currencies.

 

Second, the Federal Government has been spending more than its revenues, reflecting its classic counter-cyclical fiscal policy orientation. While revenues drop down from their 8% growth rate a year ago, down to under 4% in the last several months, government spending has continued to grow at a rate of 11.6% in the first seven months of 2012.  Government spending has played a key role in keeping the national economy growing.

 

Third, Brazilian consumers continue to spend with record low unemployment and a steady increase in real earnings.  Just imagine if the economy picks up again!

 

Fourth, Brazil’s Central Bank has also driven down interest rates with successive cuts to the prime “Selic” rate, but credit access is still tight for consumers and firms in the face of the global downtown. However, if the Central Bank sticks to its expansionary monetary policy, then eventually more will borrow at historically low rates and this could keep the economy growing in the short to medium terms.

 

Certainly Brazilian policy makers are frustrated at the global downturn and the austerity policies being implemented in Europe and the U.S. (mostly at the stat and local levels). Yet, they are employing trusted expansionary policies to weather the downturn and place the country’s workforce and firms in a more competitive position upon a global recovery.  Policymakers continue to show competency in the art of economic stability coupled with expansionary policies; no easy trick.  However, the CNI may be right to point out that future growth may depend upon rising investment in competitive industries and agribusiness; and possibly a transition from heightened consumer spending to increased savings rates among a population increasingly optimistic about employment and earnings.