End of an Era?

Sep 1, 2011

Brazil’s economy has had a good run, but analysts are readying themselves for tougher times ahead. Can the government and monetary authorities make a difference?

by Vincent Bevins

It would be an understatement to say that Brazil has had a good decade. High prices for its commodities, stable governance and the unleashing of long-dormant potential have led to some of the best economic indicators in living memory. The country grew at 7.5% last year, incomes are rising even more quickly, and unemployment is at an historic low.

President “Lula†da Silva finished his term last year with some of the highest approval ratings in the world, and his hand-picked successor, Dilma Rousseff, cruised easily to victory. It would be very optimistic to expect any government to undertake deep structural reforms in such a situation. If it isn’t broken, why fix it?

Yet the country’s success story is losing some its shine. There is a growing consensus that Brazil’s ability to cruise along on auto-pilot may be coming to an end and what...

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