The Growth Challenge

Sep 5, 2003

Brazil has wallowed in an economic malaise for nearly 20 years. Lula's economic team must deliver a high-voltage shock to turn things around.

Lula's economic team has stabilized the economy and begun passing the reform legislation needed to accelerate growth. Brazil is not out of the woods yet - indeed it is still stuck in the middle of the forest - but at least the government is heading in the right direction.

Brazil's economy has slogged along for two decades at agonizingly slow growth rates. Jobs are scarce and real incomes are falling. The challenge before Finance Minister Antônio Palocci and his team of pro-market technocrats is to deliver on their promise of rapid, sustainable growth before dissatisfaction with their policies forces President Luis Inácio Lula da Silva to decree a change of direction, and abandon liberal economic policies in favor of a dirigiste agenda more in tune with his party's leftist orientation. Although the economy is not in recession, Dieese, a union-backed research organization, says unemployment in São Paulo was 20.6% in May. The...

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