WASHINGTON, DC –These are the best of times for Brazil. The country has emerged as Latin America’s clear leader and a key global player. Its economy was among the first to rebound strongly from the recent financial crisis, and has since maintained impressive growth. Poverty has been drastically reduced, and income inequality is declining, as the middle class swells. And, thanks to the discovery of vast offshore oil reserves, Brazil not only has become energy-sufficient, but is poised to become a major oil exporter.
Yet, despite all the good news, Brazilians should be worried, because the good times will last only if Brazil addresses a host of mounting economic-policy challenges. Some concern short-term issues; most are of a medium-term nature.