Brazil’s economy boomed over the past decade as its exports—from soybeans to iron ore to offshore oil drilled from dizzying depths—were in high demand. In the past 10 years, 35 million people crossed the poverty line and joined the burgeoning middle class, according to government figures.
But the economy inched ahead just 0.6 per cent during the first half of 2012; even Latin American laggard Mexico is expected to outpace Brazil this year. Combined with worries about a credit bubble and diminished demand in China, where the economy has slowed, “the mood has changed,” says independent financial analyst Ulysses de la Torre, based in Mexico City.
President Dilma Rousseff, a former guerrilla turned pragmatist, is proposing cutting taxes and increasing private participation in the country’s crumbling infrastructure—even if some in her leftist Workers’ Party aren’t on board. Plans to allow private companies to operate roads, railways and airports are especially radical; the Workers’ Party rarely cedes control of public assets.
But putting Brazil back on track may also require a boost from China, its top trading partner, says Eric Farnsworth, vice-president of the Council of the Americas. “If China gets back its mojo,” he says, odds are Brazil will too.