The real economy
After surviving almost unscathed from the 2008-09 recession, Brazil will face some challenges in 2011. Brazil’s currency, the real, has strengthened by almost 40 per cent against the dollar since the start of 2009, and consumer prices have risen by 5.9 per cent in the past year.
Since both inflation and the strong real are caused by growth, they are the kind of problems many governments elsewhere would die to have. But they cause some friction at home. Imports are cheaper than ever and industry has lost competitiveness abroad with a strong currency.
Brazil is also suffering from a shortage of qualified workers. The country needs 60,000 engineers a year, but only 32,000 get a degree each year (most of them are from mediocre private universities). It also lacks good infrastructure – ports, roads and airports can’t keep up with the GDP growth. Airports in Brazil are managed by an air-force-dominated state company infamous for the delays of renovation projects and bad management.
Part of President Rousseff’s appeal was her reputation as a tough manager who can get things done in the slow-motion environment of Brazilian bureaucracy. But despite all the problems, Brazil’s GDP is expected to grow by at least 4.5 per cent in 2011, having grown by 7.6 per cent in 2010. Not that bad.
By Raul Juste Lores, business and economics editor, ‘Folha de São Paulo’