Thursday, February 25, 2010

It's Time to Reevaluate the Economic Performance of Brazil

"But he isn't wearing anything at all!"

The child's cry in Anderson's tale applies to Brazil. It's supposed to have enjoyed a period of great prosperity since 2005, at least according to the global public opinion. This glaringly delusional cover article in the The Economist serves as an example.

The wave of optimism about the country doesn't hold water however even to a basic evaluation of its recent economic performance, as I discuss in my latest article in (in Portuguese). Here's a translation of its main conclusion:

It becomes evident therefore, that the performance of the Brazilian economy during the last the five years was mediocre when compared with the performance of the chinese and Indian economies. It was not better than the performance of the Mexican economy too. In particular, unemployment rates and short-term interest rates have remained too high and incompatible with the rates observed in peer countries. In view of the economic bonanza enjoyed by those countries, which experienced very favorable international conditions from 2005 to the beginning of 2008, it's clear that the performance of Brazil could have been much better. The notion nurtured by the global public opinion that the Brazilian economy has been passing through an excellent moment does not correspond to the economic reality of the country.

The graphs below, reprsenting respectively GDP growth rates, inflation rates, unemployment rates, and short-term interest rates, use Principal Global Indicators data. They reveal the comparatively mediocre economic performance of Brazil during the last five years.

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