As Growth Ebbs, Brazil Powers Up Its Bulldozers

More than 40.000 laborers swarm the port complex here in northeast Brazil, building a refinery for the state oil company. Five thousand others toil at a shipyard, another government-led project. Real estate prices are soaring and unemployment is falling in this region along Atlantic coast, once known for its festering poverty. In a show of the extraordinary sway that Brazil’s government wields in nearly every important area of the economy, President Dilma Rousseff is accelerating an array of stimulus projects throughout the country aimed at blunting a slowdown that has reduced Brazil’s economic growth to a snail’s pace. Dilma Rousseff’s assertiveness in enhancing the government’s role in molding economic policy is not wholly unlike China’s state-led investment, an increasingly popular model in the developing world. Brazil’s stimulus spending has helped preserve jobs, keeping unemployment at a historic low of 5.8%, down from 13% a decade ago. Months into a sharp slowdown, Ms. Rousseff’s approval ratings stand at more than 60%. But in an echo of the debate about heavy government borrowing in United States and Europe after the global downturn, Ms. Rouseff’s moves are starting to meet resistance in Brazil. Some experts fear that Brazil is becoming too dependent on government intervention to smooth the ups and downs of an economy that remains tied to commodity cycles; others fear that creation of state-supported champions in the business world give the government even greater power to dictate policy shifts, potentially eroding Brazil’s exposure to market forces. Economists here still have unhappy memories of the aftermath of “Brazilian miracle” of the late 1960s and early ’70s, when a state-directed boom fostered fast growth for a time, but ended in rapid inflation, low productivity and a radical restructuring of economy. “Government is pressing ahead with projects of pharaonic proportions, when areas like basic sanitation need urgent attention,” said Sergio Lazzarini, an economist at Insper, a São Paulo business school, who has written widely on Brazil’s state capitalism. Investment push is already showing signs of strain. So many infrastructure projects have been approved at once, including stadiums for the World Cup soccer tournament in 2014 and hydroelectric plants in the Amazon, that government is having a hard time spending all the money allocated. For instance, just a fifth of $7 billion budgeted for highway projects in 2012 has been spent. In Ipojuca, contractors on state projects are luring workers from other government investment priorities, like the construction of a network of concrete canals in the Sertão, semiarid hinterland in northeast Brazil. Delays and cost overruns, partly because of labor shortages, have plagued big stretches of that project, which is part of a $4 billion effort to divert the flow of São Francisco River to villages in need of irrigation (…..)



Acerca de ignaciocovelo
Consultor Internacional


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