The biggest hidden story in international development these days may be Brazil's economic takeoff. Two years ago, Brazil's economy was left for dead, and the election of Worker Party candidate Luiz Inácio "Lula" da Silva as President was widely expected to trigger financial collapse.
Instead, Lula has governed with remarkable prudence, and Brazil is poised for rapid growth. But something more fundamental is at play: Brazil may finally be overcoming some of the deepest obstacles to its economic development, obstacles that held the country back for decades. If so, it could mark not only Brazil's economic ascendancy but also the recovery of other parts of South America.
In January 2002, American right-wingers were terrified of a leftist revolution in Brazil. Foreign investors were panicking over the prospect that Brazil would fail to roll over its foreign debts.
The IMF, for a change, did a good job, providing interim financing and throwing its political backing behind Lula after the elections. In turn, Lula adopted orthodox macroeconomic policies and moved to get the budget deficit under control, breaking the panic. Market projections for Brazil's growth are around 4% for 2004.