By Gustavo Prados de Carvalho
Carnaval, samba, soccer, beautiful girls and breathtaking beaches – after traveling a lot around the world and living one year in Canada in a high school exchange program, these are some of the most common stereotypes that I heard about my home country, Brazil. There are a lot more I could add to this list such as that the cities in Brazil are inside the rainforests – referring to the Amazon Rainforest – and that our capital city is Buenos Aires.
In fact Carnaval is very famous in Brazil and we do have some really good festivals. Samba is one of the most popular types of music and yes, we are good at playing soccer – we won 5 Soccer World Cups so far and hopefully we will add another star to our jersey in 2014. The biggest portion of the Amazon Rainforest belongs to Brazil and no, our city capital is not Buenos Aires, it is Brasília – built in 1960 by a very famous architect.
Well, I am happy to say that my country has a lot more to offer than just these common stereotypes. I am not saying that they are bad though, I would just like to have the opportunity to show you guys, my fellow Americans, what Brazil is up to.
We became independent from Portugal in 1822, so our official language is Portuguese. Brazil also underwent more than a half century of populist and military government until 1985, when the military regime ceded power to civilian rulers. Our current government type is a democratic federal republic, with presidency elections every four years by population votes.
Brazil is the largest country in Latin America, and the world’s fifth largest in geographic area. According to Bloomberg, our population will surpass 200 million in 2013. We are also the only country in Latin America that is part of the BRIC, a group of emerging economies thought up in 2001 by a Goldman Sachs economist, Jim O’Neil. BRIC is a grouping acronym that refers to Brazil, Russia, India and China and in 2010 South Africa was also added to this group, changing the name to BRICS. In 2012, Brazil’s GDP was 2.2 trillion USD, the 7th highest in the world (Bloomberg).
The interest rate in Brazil is reported by the Banco Central do Brasil, our “FED.” It averaged 16 percent from 1999 until 2013, reaching an all time high of 45 percent in March of 1999 and a record low of 7.25 percent in October of 2012. In Brazil, interest rate decisions are taken by the Central Bank of Brazil’s Monetary Policy Committee (COPOM). The official interest rate is the special system of clearance and custody rate (SELIC), which is the overnight lending reference rate in the country.
Over the past 2 decades, the Brazilian economy has been flying very high. Starting in 1994 where we controlled the inflation and stabilized the economy with a new currency, the “real”, controlled the ultra high levels of inflation rate, which reached up to 80 percent a month. In September 2013, the annual inflation rate was 5.8 percent, the lowest rate this year. The Central Bank targets the rate at 4.5 percent for the end of this year.
After a decade of encouraging growth, Brazil’s economy has stopped increasing. “Without substantial changes to public spendings and business relations, the country may lose its momentum” (“The Economist”). We have had years of fast rising expenses such as labor and transportation costs, and it has allowed Brazil to become a very expensive country in general. The taxes are high; it is very expensive to get the goods to the seaports to be exported and the labor costs are very high. We have to pay a lot of money to hire employees legally.
Over the past decade, the income of the poor people has increased, making them middle class, allowing them to buy more services and goods. The middle class represents almost half of the population now. The problem is that Brazilian public services and infrastructure have not improved at the same pace.
Every year, hundreds of thousands of more cars hit the roads because of the government stimulus for the population to buy more cars. But most of the roads cannot handle this huge amount of new vehicles; traffic in big cities has become worse and there are also a lot of parking issues.
Many of the new, big infrastructure projects included on the government’s Growth Acceleration Program announced in 2007, are running years behind schedule and way above budget. Brazil is still a young country, but our government spends an incredible 11.3 percent of GDP (“The Economist”) on pensions and that urgently needs to change to make room for more investments in infrastructure and public services.
We are working on changes, though. In June 2013, Brazil saw a large street demonstration of frustration, where more than a million marchers took the streets in some of the major cities, protesting against rising inflation, high taxes, poor public services and political corruption. Even soccer, a Brazilian passion, became a target to the protesters.
We must lower and simplify the taxes and rethink the outdated labor laws. We also need to partner with the private sector to provide the infrastructure the country needs.
The June protest showed the politicians that today’s young adults are better educated, smarter, less willing to accept the current levels of corruption and that we expect more investments in the country.
The global commodities boom helped the country by demanding more of the Brazilian iron deposits and agriculture produce. And in 2007, Brazil found vast deposits of deep sea oil, which we call “Pré Sal.” We also have one of the largest aquifers in the world, the Guarani Aquifer, an important source of fresh water. Brazil is today’s South American leading economic power and a regional leader. I am hopeful that we will see some significant changes over the next years, and I am studying hard and learning how to help my country be a better place to live in and make more contributions with good things for the world.