Paul Lachine

Brazil’s Growth Conundrum

In 2010, Brazil’s economy grew at an impressive 7.5% clip, as highly expansionary fiscal and monetary policies, implemented in response to the global financial crisis, lifted it out of harm’s way. While similar policies are again doing the trick today, Brazil needs to move beyond its stop-and-go cycles and ensure steady growth.

SANTIAGO – Brazil needs to grow more. That is what the country’s president, Dilma Rousseff, keeps telling Brazilians. With the economy nearly stagnant in 2011 and the first half of 2012, faster growth is a political necessity for her. But her admonition also reflects a broader national preoccupation with economic might, befitting a vast country with continent-size aspirations.

That outlook sets Brazil apart in a region where politicians – from Argentina and Chile to Ecuador and Venezuela – often seem more concerned with handing out slices of natural-resource wealth than with creating new sources of prosperity.

To be sure, Brazil’s economic growth over the last decade owed much to the commodity boom that has also benefitted its South American neighbors. In 2010, growth reached an impressive 7.5% clip, as highly expansionary fiscal and monetary policies, implemented in response to the global financial crisis, lifted the economy out of harm’s way.

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