Brazil, by far the largest and most populous country in Latin America, and the eighth largest economy in the world, has perennially been regarded as a “country of the future” whose expectations far exceed the realities.
Nonetheless, scholars and observers alike have deemed the country finally “awakened” from its perpetual state of a disappointing economy and lack of leadership. As Tom Phillips of London’s The Guardian proclaimed, “the country of the future finally arrives….the sleeping giant of South America is awakening.”1
Most recently, the leading emerging economies of the world, namely the BRIC countries of Brazil, Russia, China, and India, have been hailed as leading the way out of recession before other notable powers like the United States and the European Union (EU).
Brazil has been increasingly at the center of international issues and is seeking greater strategic ties to other emerging powers such as China.2 A recent article from The Economist notes that, “Brazil is now on every list of the half-dozen or so new places that matter in the 21st century…no international gathering…is complete without [President] Lula.”3
Emerging Economies Look Forward to the Post-Recession Environment
Brazil has long been seen as a dormant giant, in physical size, population, and potential, whose list of accomplishments are lacking. An International Monetary Fund (IMF) Working paper from December 2006 argues that Brazil’s economic performance over the last 25 years has been lackluster.4 Although the potential of the South American giant has rarely been questioned, the economy has historically lagged behind that of its fellow emerging BRIC counterpart, China. However, recent economic reforms, a proliferation of oil reserves, and growing alliances with non-Western nations have transformed the nation of the future, into a country of the moment, with sound macroeconomic policies.5
The World Bank released a forecast of the future growth in both the developed and developing world in June 2009 with a grim projection of what the future world economy holds. However, the World Bank emphasized that the greatest contractions would be seen in the high-income areas of the United States and the euro zone, rather than the developing world.6 The Bank also asserted that developing countries would, in fact, see growth in the remainder of 2009.
The IMF released a report on July 22, 2009 entitled, “BRICs Drive Global Economic Recovery” referring to a new world order in which the emerging economies, with Brazil among the top contenders, as taking on a new leadership role in the post-recession environment.7 Other Asian economies are making headlines as leading the way out of recession, namely China, Indonesia, South Korea, and Singapore.8 The Asian rebound juxtaposed to sluggish Western economic recovery has been even more startling to the international community as the world heads out of recession.
To read the entire article, click here.
A benchmark of the coalition of emerging economies was the first-ever BRIC summit in Moscow in June 2009, which intended to highlight the increasing clout held by its members. Brazil, China, and India have weathered the global financial crisis better than the world as a whole and have begun to reunite against the supremacy of the United States and its currency.9 A major goal of these emerging economies has been diversifying its foreign reserves away from the American dollar. The official summit solidified the growing importance of developing and emerging markets as the wave of the future, and a starkly different post-recession global economy.
- An article written by Brazilian president, Luiz Inacio Lula da Silva about the BRIC summit
- The Economist recounts how the biggest emerging economies are rebounding ahead of the West
As Angel Gurría, Secretary-General of the Organization for Economic Cooperation and Development (OECD), explains, “The global financial and economic crisis has not left Brazil unscathed…prudent policies have enabled Brazil to respond to the global crisis with measures that are counter-cyclical, that is, what is saved in good times can be used to support the economy in a downturn.”10
A recent issue of The Economist also points out that, “Among the last to fall into recession, Brazil may be among the first to grow out it.”11 Statistics show that the economy performed better than expected in the first quarter of 2009, during which the national GDP shrunk by only 0.8 percent.12
According to the OECD’s Economic Survey of Brazil for 2009, the country has undertaken several policies that have enabled it to develop successful coping mechanisms amidst the current global financial crisis, such as tax reform, macroeconomic stabilization, and more efficient government policies.13
Economists have noted that Brazil is at last starting to realize its potential as a major global power. The country is experiencing its largest economic expansion in three decades and lessening the gap between the rich and the poor.14 In an analysis composed by Euromoney from March 2008, Brazil has some of the best managed companies in all of Latin America, spread across several sectors, such as aviation, auto, banking and financial, conglomerates, and consumer goods.15
Last year President Lula won investment-grade status for Brazil’s sovereign debt, a major accomplishment for a country longed plagued by hyperinflation and defaults.16 While bettering the investment environment, social programs have also been expanded reducing poverty rates and strengthening a Brazilian middle class.17 The Central Bank President in Brazil, Henrique Meirelles stated, “Brazil’s fundamentals are strong,” which support a tremendous domestic economy with a population of over 198 million.18
Export Booms and Oil Finds
Brazil is the biggest exporter worldwide of meat, coffee, sugar, and fruit juices, and the second biggest worldwide of grains, according to estimates by the Brazilian agriculture minister Reinhold Stephanes.19
Compounding its already booming exports are the recent offshore oil discoveries by the state-owned oil company Petrobras. Brazil experienced a tremendous deep-water oil field discovery off its southeastern coast.20 Petrobras has estimated that there are anywhere from five to eight billion barrels of crude oil and natural gas in the field.
Such a mammoth discovery, in addition to its increasingly sound economy, has the potential to transform Brazil into a global energy power along the lines of OPEC (Organization of Petroleum Exporting Countries) states, like Saudi Arabia, and revolutionize the politics of all of Latin America. Domestically, Brazil has almost instantaneously been given added political clout, which it can use as leverage in international bargaining,
Another outcome of the oil boom has been an investment spike in Rio de Janeiro, with an estimated $67.6 billion expected to flow into the state by 2010.21 The oil boom and diversified economy has enabled Brazil to be less vulnerable to a “hangover from the struggling United States economy.”22
The Giant Leans East
As Brazil acquires greater political and economic clout in its drive out of recession, the populous democracy has begun to tilt toward China, Iran, and the “Global South,” and ultimately away from the United States.23 China, in particular, has become Brazil’s biggest single export market, ahead of the looming superpower to the North, the United States. Brazil has become increasingly more independent as a nation, starting on the road of fulfilling its potential with the help of its recent oil discoveries.
Underscoring the importance of both Brazil and China as emerging markets in a changing, multipolar world is the agreement made between Hu Jintao, the Chinese President, and Brazil’s President Lula da Silva on May19, 2009. The agreement stipulates that a Chinese oil company and the China Development Bank will lend the national Brazilian oil company Petrobras $10 billion in return for 200,000 barrels a day of crude oil for ten years.24
In an interview with scholar Jiang Shixue from the BBC, she explains, “Brazil under the leadership of Lula has been quite successful in promoting South-South cooperation…all the developing countries in the world have been more united in such areas as international trade, like the Doha Round, and resisting big-power politics.”25
China and other non-democratic countries, such as Russia and Iran, are beginning to show a special interest in Latin America, namely Brazil, for investment and deeper diplomatic ties. Brazil is quickly on the road to becoming a major world power and inciting much attention for its economy and oil.
This “would-be-great” power is a democracy in a democratic region yielding tremendous influence over non-democracies like China. Therefore, although the future of Brazil’s alliances is yet to be entirely determined, it is clear that Lula is diversifying away from the West and capitalizing on the country’s new influence elsewhere.
A Multipolar Shift with Brazil in the Limelight
As the world grapples with one of the worst financial recessions of all time, the emerging economies of countrie,s such as Brazil and Chin,a are arguably performing better than the US superpower and the major EU bloc. Brazil, South America’s most influential and powerful country, is using this opportunity to prove itself as a contending world power harnessing its authority regionally and globally.
1 Phillips, Tom. “Brazil: The Country of the Future Finally Arrives.” The Guardian. 10 May 2008. Financial Times, pg 41.
2 “The Dragon in the Backyard.” The Economist. Briefing: Americas. 15 August 2009. P 19.
3 “Whose Side is Brazil On?” The Economist. 15 August 2009. Leaders, p 10.
4 Abrogue, Ricardo, Martin Cerisola, et al. Brazil’s Long Term Growth Performance: Trying to Explain the Puzzle. IMF Working Paper.WP/06/1282 December 2006. p. 3.
5 World Bank, Country Briefs: Brazil.
6 Wassener, Bettina. “World Bank Cuts Forecast for Developed Economies.” The New York Times. 22 June 2009.
7 “BRICs Drive Global Economic Recovery.” IMF Survey Magazine. 22 July 2009.
8 “An Astonishing Rebound.” The Economist. Leaders: 15 August 2009. P 9.
9 Levy, Clifford. “Emerging Powers Prepare to Meet in Russia.” The New York Times. 15 June 2009.
10 “Recent Reforms Strengthening Brazil’s Resilience.” OECD 14 July 2009.
11 “Ready to Roll Again.” The Economist. 11 June 2009.
13 Economic Survey of Brazil: 2009. Organization for Economic Cooperation and Development.
14 Barrionuevo, Alexei. “Strong Economy Propels Brazil to World Stage.” The New York Times. 31 July 2008.
15 “Best-managed LATAM Companies.” Euromoney. Corporate Finance. March 2008.
16 Smith, Geri. “Brazil’s Coming Rebound.” Business Week. 17 August 2009. P 42.
19 Supra note 1.
20 Barrionuevo, Alexei. “Brazil Discovers an Oil Field.” The New York Times. 19 November 2007. World: Americas.
21 Supra note 13.
23 Supra note 2.
25 Wentzel, Marina. “Interview on China’s Relations with Brazil.” 15 May 2007. BBC Brasil.