Safe Democracy Foundation - Safe Democracy

Today Brazil receives an important flow of capital in the form of direct, as well as financial, investments, partly induced by the differential between the American and domestic interest rates. What would happen if the United States were to effectively slip into a recession and the Federal Reserve were to decide to continue lowering the rates? What would the consequences for the local economy be?

• Brazil is looking to accelerate its growth
  por Marcelo Luchino
• The Globalization of Brazil
  por Marcelo Luchino

Brazil, just like other emerging countries, is experiencing an shortage of infrastructure, which is hindering its economic growth. For this reason, President Lula’s government launched the Growth Acceleration Plan (PAC in its Portuguese initials) exactly one year ago: a four year, 190 billion euro investment plan that hopes to achieve the goal of a GDP economic growth rate of 5 percent between 2007 and 2010.

No one doubts the overwhelmingly strong force that is the current Brazilian economy. Brazil’s production represents a third of the total of Latin America. Large local conglomerates in the sectors of iron and steel, mining, oil, and manufacturing are paving the way toward globalization. However, optimism decreases upon reviewing some empirical data. Why economic growth less than expected, including a 5 percent average growth rate, one inferior to its neighbors. Is it the responsibility of the Central Bank of Brazil and its monetary policy? Divisions among analysts.

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