« Interview: Imagina na Copa | Main | Brazil's Bus Fare Protests: More Than 20 Cents »

June 13, 2013



The battle to win votes will almost always win out over sound economic and/or social policy. That is, unfortunately, a universal fact. How can a government claim to be serious about fighting inflation when Dilma just announced a new program which will provide R$17 Billion in low cost financing (R$5k per family, 5% ANNUAL rate, 48 months to pay) for those in the Minha Casa, Minha Vida program to buy "kitchen appliances", the definition of which includes digital TV sets, computers, sofa's and beds. Also announced yesterday was a "mega investimento" in Rocinha, including a ski lift (gondola similar to Alemao) daycare center and sewage system. I am not saying these will not be of benefit to Rocinha residents (and in the case of sewage treatment for those of Sao Conrado too) but in times of high inflation, big spending programs are usually deferred. On the other hand, to have visible progress by election day is, it seems, a higher priority.

Brasil has a noose around its neck. That noose is called the "Brasil Cost", the fact that pretty much everything costs more in Brasil due to higher inefficiency, taxes, regulatory burdens, and profit margins, coupled with inadequate infrastructure for moving products to markets or to export facilities, and the woefully inadequate port facilities and surrounding infrastructure.

While life has visibly improved for many Brasilians over the past five years, it could be improving significantly more. Negative economic cycles are a fact of life, planning must take those into account instead of simply planning for the most optimistic scenarios. The State of Rio thought it had locked in a huge revenue flow from offshore oil royalties, and made plans assuming the best case scenario. Now, that has changed but I have not heard about any planned cut backs or cancelled projects.

Brasil is going to face some challenges over the next few years which new stadiums will not help resolve. Privatization of some publicly owned facilities can help, if done intelligently. The recent ports proposal contained an automatic 50 year renewal, thank goodness Dilma vetoed that! The Dollar/Real exchange trend (weakening Real, and it could be much weaker without Manteiga's near continuous meddling, is saying things are going to get worse for Brasil before they get better. Perhaps fewer shopping trips to Miami or New York? Naw, spend it while you got it!

Lisa Kauffmann

It was only a matter of time before the bubble was going to burst. It is unsustainable. The prices of basic food (cesta basica) has skyrocketed. Real esate is more expensive in some neighbourhoods than it is in cities such as NY and London.Public money used to renovate Maracana, only to have Eike Batista come along and buy the concession for a song.
Mensalao, laranjas, ficha limpa, pizza.

Brazil is , unfortunately, on its way back to hyperinflation and probably another dictatorship (but this time by left wing ex guerrillas).

It is a shame because they have said for years that Brasil is the country of tomorrow, but that tomorrow never comes.

The comments to this entry are closed.