Many people – foreigners – are asking me about how the Brazilian Economy is doing and how deep it will be affected by this incredible crisis. Usually I write in Portuguese in this blog because it is intended to Brazilian alumni of IE. However, I feel like I must say something to other IE alumni worldwide.
I may be an optimistic, besides I am Brazilian. But as a person who does not support Lula government entirely and simply has been reading newspapers and following the Brazilian news and economy for the last 10 years together with my studies (MBA and PhD) I must say I do not see strong reasons to believe the Brazilian economy will be largely affect by this crisis. In fact, I think after all this crisis will be fine to Brazil in a medium term, relatively speaking (I will explain why is that later).
Brazil did not put in motion the necessary reforms to make the country both more integrated to world economy and make our market more business friendly. We may call that luck. In fact, some small reforms have been done but not structural ones yet. As a consequence, Brazil still is quite bureaucratic as a State, with trade barriers affecting and distorting our trade with the world. It is true that Brazil exports a lot of commodities but the country do not depend on these exports to move its market today.
A great part of the growing Brazil is experimenting today is depending on internal growth and although its taxes are among the highest in the world both companies and government are making money; so are citizens. Besides, as a huge food producer Brazil will not be as affected as other commodity producers because people can avoid using cars or build houses for a while but people can’t avoid eating. This is all I can say today. Besides this point I am totally guessing.
So, the probable positive part of this story resides in the fact that after proving Brazil was not strongly affected by this crisis; the country will attract attention and could gain self-confidence to use resources that were obstructed or locked up during the crisis. What do you think about this reasoning? Will Brazil became the next booming China? This was a short but provocative thought I would like to share with you.