The last decade in Brazil has been truly remarkable. The economy experienced a period of rapid growth and job creation which expanded the middle class and enfranchised millions of people.
- Alberto Ramos
A View from Brazil
Alberto Ramos, head of Latin America Economics Research, Global Investment Research Division, discusses Brazil's economic progress over the past decade and what its future may hold.
Additional Insights on Brazil from Goldman Sachs Global Investment Research
In 2012 the Brazilian authorities will be challenged to deal with a likely less supportive external backdrop than in 2010-11. However, fortunately the authorities enjoy significant policy flexibility and seem determined to adjust counter-cyclically the macroeconomic policy mix to help the economy adjust to a less favorable external environment. As such, we expect the authorities to, in the near-term, continue to ease monetary policy, provide fiscal incentives to selected sectors, and stimulate credit origination through official banks, in order to support domestic demand.
Latin America has made significant progress since the 1990s in fostering a more supportive growth environment. The region currently ranks above other emerging markets in the terms of macroeconomic stability (low/moderate public debt and fiscal deficits), school enrolment, life expectancy, and access to technology, especially mobile phones penetration. However, these developments, while favorable, have not been deep enough to allow the region to increase visibly its still limited potential real GDP growth. One key factor hindering progress in this regard is the inadequate and poor quality of the existing stock of infrastructure, which is the result of years of low investment spending as a share of GDP.
- Brazil is a good example in the prioritization of infrastructure spending, with the launching of the Growth Acceleration Program (PAC) in 2007. The program is essentially a medium-term investment package geared to accelerate the country’s economic growth potential through key investments in social and physical infrastructure: housing, transportation, utilities, and sanitation. Overall, the PAC program is an encouraging sign of the commitment of the Brazilian authorities to enhance the competitive edge of the economy through the expansion and modernization of the stock of public infrastructure.