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Brazil, Country of the Future No More?

SANTIAGO – During a visit to Rio de Janeiro last year, US President Barack Obama told a cheering crowd that Brazil is the country of the future no more. “For so long, you were...told to wait for a better day that was always just around the corner,” Obama said. “Meus amigos, that day has finally come.”

Is Obama right? At first blush, the answer would seem to be an unambiguous yes. Brazil today is democratic, and its president gets to sit next to Russian, Indian, and Chinese leaders at much-publicized “BRIC” summits. The economy weathered the crisis triggered by Lehman Brothers’ collapse in 2008, and mounted a vigorous recovery in 2010. Brazil not only remains a top football power, but it will host the World Cup in 2014 – and the Summer Olympics two years after that.

For a while, financial markets were engrossed in a torrid love affair with Brazil. In the aftermath of the crisis, capital poured into the country, bidding up asset prices. Oil giant Petrobras raised $67 billion in its IPO, which until then was the world’s largest.

But dig a little deeper and a more complex picture emerges. An apartment in a fashionable São Paulo neighborhood may cost as much as it would in London or New York, but, when it comes to competitiveness, Brazil ranks 53rd on the most recent World Economic Forum index – just ahead of Mauritius and Azerbaijan, and behind Malta and Sri Lanka.