Sitting in his air-conditioned office in Guaranta do Norte, a remote agricultural town on the edge of the Amazon rainforest, local mayor José Humberto Macedo looked a contented man.
Thanks largely to the global boom in commodities, this soya-growing region has come to the vanguard of Brazil’s march on to the world stage. “This is going to be the new Brazil,” Macedo said, explaining how rising commodity prices had made his region, Mato Grosso state, a powerhouse of the Brazilian economy.
Across the country similar optimism can be heard now among businessmen and politicians, all convinced that South America’s sleeping giant is finally waking up. Brazil has long been known as the pais do futuro (country of the future). But a series of economic and political crises and 21 years of military rule somehow meant the future never quite arrived.
Now things seem to be changing. Brazil’s currency recently hit a nine-year high against the dollar, inflation is under control and millions of Brazilians are being propelled towards a new middle class. Last week, meanwhile, Brazil was awarded “investment grade” status by the financial rating agency Standard & Poor’s, sending the country’s stocks soaring to an all-time high.
Following the announcement Brazil’s President, Luiz Inácio Lula da Silva, said: “If we translate this into a language that the Brazilian people understand, it means that Brazil was declared a serious country, that has serious policies, that takes care of its finances with seriousness and because of this we deserve international confidence.” From oranges and iron ore to biofuels, Brazilian exports are booming, creating a new generation of tycoons. Brazil’s millionaire club grew from 130 000 in 2006 to 190 000 last year — one of the fastest rates in the world, according to a study by the Boston Consulting Group.
“We are the biggest exporters of meat, coffee, sugar, fruit juices and the second-biggest of grains,” Brazil’s Agriculture Minister, Reinhold Stephanes, boasted at a conference in Brasilia last month.
Meanwhile, Brazil’s stock market, the Bovespa, was one of the best performing in the world last year.
Despite the world economic crisis, the Brazilian government recently raised the nation’s projected growth rate this year to 5% — lower than the other so-called BRIC nations of Russia, India and China but impressive for a developing country.
“The future has already arrived,” said David Fleischer, a political scientist at the University of Brasilia. “Foreign investments coming into Brazil are very strong; inflation is more or less under control; Brazil now has more international reserves than foreign debt and the commodities are booming.”
Not to mention the oil. Huge offshore discoveries by the state-owned energy company, Petrobras, has led many to dub the president “Sheikh Lula” and claim that Brazil might soon become a major oil producer.
In April Haroldo Lima, head of Brazil’s national petroleum agency, made headlines when he claimed that another huge oilfield had been found off Rio’s coast. The news appeared to confirm what many Brazilians have long thought: God is Brazilian.
Lia Valls, an economist at Rio de Janeiro’s Getulio Vargas Foundation, said: “We are now living [in] a singular economic situation we have never experienced before. The international situation is very favourable to Brazil.”
In February, when the government announced that it had paid off its foreign debt, Lula boasted that Brazil had “taken an extremely important step towards transforming itself into a country taken seriously in the financial world”.
“We will transform this country, definitively, into a great economy and a great nation,” the president said.
Keen to transform itself from developing nation to world power, Brazil also presides over a 1 200-strong United Nations stabilisation force in conflict-ridden Haiti. Paulo Cordeiro, the country’s former ambassador to Haiti, said the presence of Brazilian troops was a “demonstration of Brazil — wanting more responsibility. I think Brazil has already reached a certain level of development in which the international community starts calling on it to act more.”
“Brazil’s international leadership has grown a great deal in the past six or seven years,” said Fleischer, citing Brazil’s involvement in the UN mission to Haiti and its leadership of the emerging nations in the Doha talks. “The tendency is for this influence to keep growing.”
For analysts, much of the euphoria sweeping Brazil has arisen thanks to the ability to control the inflation that plagued the country in the late 1980s and early 1990s. In 1993 inflation reached 2 490%. Today the figure is about 4,7%.
“I think now it is difficult to imagine a return to this,” said Valls.
Analysts are less certain, however, about the effects that a drop in commodity prices might have. Many believe this could bring a dramatic end to Brazil’s boom. Others question whether the infrastructure and education systems are strong enough to maintain the economic momentum.
Valls warned: “All this does not mean you are guaranteed economic growth. Brazil still has serious structural problems; there needs to be lots of investment in infrastructure. There are some serious pitfalls that compromise this growth: education, having a qualified workforce, health.” —