Brazil in the 21st Century

Brazil in the 21st Century

South America

Brazil. – At the end of the first decade of the 21st century, the political activism of Brazil on the international scene, characteristic of the presidency of Luiz Inácio Lula da Silva (2003-2010), was confirmed in the choices of the new president Dilma Rousseff, in office since January 2011. The prestige acquired by Brazil in the field, thanks to intense diplomatic activity and above all to the impressive economic growth, called the South American country to new and more complex challenges to see its role as a global player recognized, with the ambitious objective, shared by other emerging countries, of reforming world governance through the affirmation of a multipolar political model. The Brazilian aspiration to a permanent seat on the Security Council was thus at the center of Rousseff’s speech at the opening of the United Nations General Assembly (September 2011) in the context of severe crisis in which, mainly, the northern countries of the world. Inside the country, despite the alarm over the rampant corruption in the government and the ruling class in relation to the preparation for the 2014 World Cup, the merits of the Lula administration, which had been able to favor the ” social inclusion of large sections of the population previously relegated to the margins of active political participation, of the consumer market, of the world of work and education (reaching about 90% of schooling in the child population). For Brazil 2007, please check extrareference.com.

The engine of these changes was a very sustained economic expansion, interrupted only by a slight decline in GDP (-0.6%) in 2009, in the midst of the global economic crisis, and recovering again the following year with accelerated growth. of the GDP of 7.5%. In 2010, Brazil surpassed Italy, ranking as the seventh largest economy in the world and it is expected that, due to a favorable growth differential, by 2013 it will reach sixth place ahead of the United Kingdom. In the space of a little less than a little less than twenty years, Brazil has profoundly changed, transforming its condition as a country characterized by fragile and uneven growth, with one of the highest foreign debt in the world, inflation rates that in some periods have reached 7000%, and very high indices of social inequality and rural and urban poverty, in that of one of the most dynamic emerging economies, capable of combining economic growth and reduction of inequalities, and in able to overcome the effects of one of the most serious global economic and financial crises of the last eighty years almost without consequences. All this was possible thanks to the enormous economic potential of the country, one of the main world producers and exporters of raw materials (iron, bauxite, manganese, copper, tin, gold), of agri-food products (coffee, soy, cocoa, citrus fruits, cotton., sugar cane), energy products (bioethanol, biofuels), as well as one of the world poles of the automotive and aerospace industries. This potential, however, it was not sufficient to guarantee a stable and lasting development of the country without first being attacked by the structural problems of a financial and social nature that negatively affected the continuity and sustainability of its economic growth. The first measures for the financial recovery of the country were taken in 1994 with the implementation of three important reforms envisaged in the so-called Piano Real (from the name of the new currency introduced that year): the adoption of the floating exchange rate, the definition of a monetary policy based on inflation control objectives (inflation targeting) and the approval of the tax liability law to keep public spending under control.

These reforms, flanked in the early 21st century by an extensive program of redistributive policies and measures to support the purchasing power of the poorest classes of the population, quickly produced remarkable results in terms of financial stabilization and economic growth. The anti-inflationary orientation of monetary policy has in fact allowed the stabilization of the inflation rate which, starting from 2003-2004, remained within the objectives set by the Central Bank (4.5 per cent ± 2 per cent), while the tax has allowed the formation of high primary budget surpluses (constantly higher than 3% until 2009, only to fall slightly below this level in subsequent years). Consequently, the public debt, whose level up to 2000 was around 60% of GDP, fell to just above the 40% threshold in 2010. Furthermore, thanks to the process of progressive trade liberalization and greater opening to world markets, Brazilian exports have been able to take advantage of the rise in world prices of raw materials and food products, supported by the growing need for resources on the part of China (see.) and in just seven years they increased almost threefold, from just over $ 73 billion in 2003 to over $ 200 billion in 2010. During those same years, the trade balance remained steadily in surplus, and after having reached in 2006 the value of 46, 5 billion dollars settled in the following years on levels ranging between 20 and 25 billion dollars. The strong growth in exports was, moreover, largely supported by an effort of active research and diversification of outlet markets which considerably changed the geography of Italy’s trade: in 2011 the main commercial partners were the European Union to which about 18% of exports are directed, China with 17.3% and the Mercosur countries with just over 11%, while the United States has significantly reduced its share of the country’s total exports which fell from 25% in the years 2001-2002 to about 10% in 2011. Contrary to what happened in other emerging economies, the development of Brazil was driven not by exports, bolsa familia, introduced in 2003 on the initiative of President Lula and other measures such as subsidized credit for pensioners and low-income employees and the guaranteed minimum wage. Overall, around 30 million people have emerged from poverty in ten years, both as a result of income redistribution programs and as a result of rapid economic growth.

In seven years, the unemployment rate has almost halved, falling to 6.7% in 2010, the lowest level ever recorded in the country, while citizens falling into the middle income classes have exceeded the 100 million threshold and have become the first time the majority of the population. At the same time, the class of so-called HNWI (High net worth individuals), made up of individuals who have a high net worth, with availability of more than 5 million dollars, which in 2010 would result in Brazil being over 150,000, more than in India and Russia. The rapid rise of the new middle class has transformed Brazil into one of the world’s largest markets for computers, automobiles, home appliances, cell phones and PDAs, personal care products, ceramics and building products. The liveliness of the market has also made the country the second destination destination after China in world flows of foreign direct investments. The latter, after the decline in 2009 (29.5 billion dollars), grew again to reach 48.5 billion dollars in 2010, thus signaling the high degree of investor confidence in the country’s development prospects.BM&F Bovesa) completely in contrast with areas of the planet. The huge inflows of capital and the revenues deriving from commercial assets have contributed to the improvement of the external position of the country which since 2007 has become a net creditor towards the rest of the world, leading to the accumulation of huge foreign exchange reserves whose stock, increased tenfold in just ten years old, it reached a value of 353 billion dollars in 2011. With regard to the future development prospects of the Brazilian economy, one of the most critical factors is the country’s heavy infrastructure deficit which prompted the government authorities to launch in 2007 a vast infrastructure investment plan (PAC, Investment Acceleration Plan) worth 288 billion dollars in the sectors of transport, energy, health, housing, water resources. The implementation of a second phase of the plan (PAC2) for the years 2011-2014 and the start of preparations for the 2014 World Cup and the 2016 Olympics also led to the mobilization of an additional 576 billion dollars of infrastructure investment spending. The medium / long-term sustainability of Brazilian economic growth is also conditioned by the progressive appreciation of the real exchange rate, due precisely to the high inflow of capital, which weakens the competitiveness of exports and slows industrial development, as well as by the excessive tax pressure that it feeds a public spending system still characterized by inefficiency and pockets of corruption.

Brazil in the 21st Century