Brazil, dubbed by Goldman Sachs as one on the BRIC nations (along with Russia, India and China) is a nation transformed. With apologies to the classic song, who would want to return to the old Brazil, where with economic mismanagement, entrenched poverty and high crime rate, life was anything but a carnival?
Under the popular former President Luiz Inacio Lula da Silver, who reportedly left office with an approval rating approaching 90 percent, Brazil achieved political stability. According to an Associated Press article earlier this year, his social programs and wealth distribution helped pull 20 million people out of poverty and into the middle class. Unemployment is at an unprecedented low (6.4 percent in April), and its currency has more than doubled against the U.S. dollar. The country also recovered quickly from the global economic downturn.
The country is also a pioneer in green initiatives such as the Bus Rapid Transit system that reduced city congestion and pollution. And it is playing an increasingly visible role on the world stage. It is hosting the 2014 World Cup and the 2016 Olympics.
Brazil now stakes its claim to being the world’s fifth largest economy after reporting 7.5 percent economic growth in 2010. Once a debtor nation, it now lends money to the International Monetary Fund. It’s projected 4.9 percent increase in the Gross Domestic Product bests U.S. projections for this year.
Another sign of Brazil’s economic clout are the record profits posted by its two biggest companies, the oil giant Petrobras ($20 billion) and the mining company Vale ($17.3 billion, more than tripling its profits of the previous year, according to the BBC).
Lula’s hand-picked successor Dilma Rouseff, who had never held an appointed office, is Brazil’s first woman president, and she has vowed to continue his policies. Some question whether she will be able to match Lula's considerable diplomatic skills and international popularity (“I love this guy,” President Barack Obama enthused at the G2 summit two years ago). “During his presidency, he traveled widely and gained plaudits—and wider markets—for Brazil with a foreign policy that transcended Latin America,” observed Arthur Fishlow in Americas Quarterly. “Dilma cannot, and will not, match this record. Satisfying Iranian President Mahmoud Ahmadinejad and U.S. President Barack Obama simultaneously, as well as Chilean President Sebastián Piñera and Venezuelan President Hugo Chávez closer to home, is a daunting effort that requires first-class diplomatic skills.”
There is another cloud on the horizon, The Economist recently cautioned, in the form of rising inflation, which is driven by food and fuel costs. Rousseff has announced $30 billion in public spending cuts to stop the economy from overheating.