BRASILIA – Large emerging economies were hit hard in the past year – particularly in the first half – by the crisis in developed countries, with Europe in recession and the United States staging only a meager recovery. But 2012 will also be remembered as the year when structural changes in the Brazilian economy were consolidated.
The global economic crisis that began in 2008 is similar to the Great Depression of the 1930’s not only in terms of its depth and duration, but also in view of advanced countries’ policy errors and hesitation. It is worrying that European leaders find it so difficult to agree on fiscal adjustment policies that make room for the stimulus measures needed to revive economic growth. Until now, European countries with fiscal leeway have insisted on spending and investment cuts that, together with tax increases, have reduced economic activity and increased unemployment, ultimately compromising tax collection – and thus fiscal consolidation.