BRAZIL’S WORLDWIDE RISING
Monita Pesumal analyses the economic ambitions of South America’s most influential country
Brazil is South America’s largest country and one of the world’s leading democracies. In a report presented at the World Economic Forum (WEF) in Davos in January, it was officially announced that the Latin American economy would grow by 1.6 percent this year and 2.3 percent in 2021 mainly due to Brazil’s success with Jair Bolsonaro’s presidency.
In October 2018, the far-right candidate won the presidential election by obtaining slightly over 55 percent of valid votes.
Having beaten rival Workers’ Party candidate Fernando Haddad, the 64-year-old assumed office in January last year. According to analysts, Bolsonaro won the election because voters were demoralised by the country’s worst ever recession from 2014 to 2016, crime and hyper-corruption. They hoped that he would usher in a new era of prosperity and peace in Brazil.
A year or so later, where do we stand in terms of the pipe dreams of Brazilian voters?
According to a Reuters article published in January, Bolsonaro’s approval rating surged in a recent poll thanks in part to an improving economy, and his government’s efforts to fight corruption and make Brazil’s cities safer. Bolsonaro has almost six million followers on Twitter who are quick to either pounce on or praise his every word.
Brazil is the world’s ninth largest economy and the biggest in Latin America, but a Reuters poll reveals that Brazilians are concerned about the economy, productivity, jobs and public security.
Driven by minerals, crude oil, machinery, iron, steel, vehicles, frozen meat, soya beans, corn, sugarcane and cereals, Brazil shipped an estimated US$ 224 billion worth of goods around the world last year. In January, the South American giant posted a trade deficit of 1.7 billion dollars. Exports totalled US$ 14.4 billion while imports amounted to 16.2 billion dollars, Brazil’s Ministry of the Economy revealed.
To put the economy in perspective, the services sector is the largest in Brazil and accounts for nearly 70 percent of GDP while agriculture and industry also contribute substantially to the republic’s growth.
According to the International Energy Agency (IEA), oil output has been rising rapidly in Brazil and production has surged to a record 3.1 million barrels a day. This makes Brazil the third largest producer after Saudi Arabia and Iraq, having generated the equivalent of more than 10 percent of OPEC output.
While Brazil has larger oil reserves than some OPEC members and Bolsonaro has expressed an interest in joining the group, membership talks are ongoing although it has made no formal request to join the club.
The areas in which the Brazilian government under Bolsonaro’s leadership is considered to have performed well include fighting corruption, boosting the economy and public security. Brazil’s economy also received US$ 28 billion in foreign investments over the first six months of 2019 – and this makes Brazil the fourth largest destination for capital flows among G20 countries.
According to the aforementioned survey however, the government is viewed as falling short in raising living standards, healthcare, education, fairness and environmental protection.
The exploitation of the Amazon rainforest, 60 percent of which lies in Brazil, has been of major international concern since the wilderness is a vital stabiliser of the ecosystem. In October last year, the government went on the record stating that “protecting the Amazon is our duty. We are aware of this, and will also work to combat deforestation and criminal activities that endanger the Amazons.”
Brazil recorded an average unemployment rate of nearly 12 percent in 2019, the lowest since 2016, the country’s statistics agency IBGE revealed. The government maintains that over 760,000 employment opportunities have been created since it assumed power, marking a positive sign of improvement for the economy.
Unemployment has fallen since Bolsonaro took over but despite the decrease, it is a critical issue in Brazil. The unemployed population amounts to 11.6 million. The number of citizens without formal contracts (and are therefore unprotected by labour rights) stood at a mammoth 38.4 million.
On the brighter side, the lure of the vast Amazon rainforest, sun kissed beaches of São Paulo, and late night street carnivals in Rio de Janeiro with their pulsating samba beats and sequined bikini clad models make Brazil a leisure and ecotourism hotspot.
According to the country’s National Confederation of Commerce of Goods, Services and Tourism, Brazil’s carnival celebrations in February were projected to inject about BRL 8 billion (or US$ 1.9 billion) into the economy.
Restaurants and nightlife were forecast to generate the most income during the carnival (BRL 4.8 billion) followed by the transportation sector with an anticipated income of 1.3 billion reals (306 million dollars).
Moreover, the government is looking to develop the tourism potential of the country’s natural wonders and officials have pledged to double the number of foreign visitors by 2022.