Now GDP growth is slowing, investment is falling, the budget deficit is widening and the external accounts are weakening.
One problem is that the inadequacy of Brazil’s infrastructure, which largely reflects poor official decisionmaking in the past 10 years, directly impedes further growth in production and trade.
For example, the authorities placed a high priority on a high-speed rail project that has already surpassed several cost estimates and has not yet left the planning stage. Meanwhile, the existing rail system is so precarious that it is impossible to travel by train from Rio de Janeiro to Sao Paulo, or Belo Horizonte, or Brasilia.
The public healthcare system is a horror show. With rare exceptions, primary and secondary schools leave students badly prepared for university.
Rousseff’s administration faces a dismal outlook. Slow growth has been accompanied by a loss of competitiveness, leading to massive imports of Chinese goods and to a self-defeating protectionist reaction. Ambitious public-investment projects are advancing slowly, if at all.
Now Brazilians are on the streets demanding change.
As economist and former Brazilian Central Bank president Afonso Celso Pastore said: “Rousseff and her ministers simply do not believe in orthodox prescriptions.”
The trouble is that they do not seem to have a viable alternative.
Luiz Felipe Lampreia, a former Brazilian foreign minister, is vice chairman of the Brazilian Center for International Relations and chairman of the Council on International Affairs at the Federation of Industries of Rio de Janeiro.
Copyright: Project Syndicate