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 Economic growth might have been higher in 2001 had the government
completed various key reforms but have been kept away from the priority list
by politically minorities whose interests would be harmed.
By Adhemar Altieri
As he delivered a speech at the grand opening of a new $600 million Peugeot-Citroen
plant in the Rio de Janeiro state town of Porto Real recently, President Fernando Henrique
Cardoso made headlines with remarks that speak volumes about where the 2002 presidential
election campaign is headed. His comments also reinforce what both government and
opposition seem acutely aware of in this very early going: both seem to agree the economy,
or how its performance is perceived at election time, will decide who Brazil's next
president will be.
Using the new factory as an example of what is expected for Brazil in the foreseeable
future, Cardoso compared this year's projected GDP growth of 4.5 percent to that of
Brazil's so-called "economic miracle" years during the 70's, when the GDP
progressed at an average of 6 to 7 percent per year. Cardoso's rationale: 4.5 percent in
2001 will be accomplished in spite of unfavorable conditions like free-falling commodity
prices (which negatively affect important Brazilian exports), high oil prices, and
economic difficulties not quite out of the way in neighboring Argentina, a key trade
partner.
Add to this the fact that demographic growth averaged 3 percent a year in the 70's, but
is now down to 1.3 percent a year, and you arrive at the President's conclusion: growing
4.5 percent now he says, is comparable to growing 6 or 7 percent per year three decades
ago. According to Cardoso, GDP calculations include a variable which, depending on
demographic growth, makes the final GDP figure higher or lower.
A number of experts heard by the Brazilian media found it difficult to agree with the
connection made by the President—most explained that at best, demographics influence
about 10 percent of a GDP projection. To infer that lower demographic growth should imply
a substantially higher GDP figure for the year, therefore, would seem to be quite a
stretch. But the comparison is no surprise in the context of an electoral campaign that's
clearly under way, although the government hasn't even firmed up who its candidate will
be.
As Brazil's economic recovery began last year, it became obvious that it would not
bring about explosive growth. While 4.5 percent is a healthy number, most economists agree
that it is only enough to sustain what is there now and provide small improvements here
and there—it is not enough to make a broad, seriously noticeable dent on high
unemployment figures for example. Economic growth might have been higher in 2001 had the
government completed various key reforms that amount to serious obstacles for growth, but
have been kept away from the priority list by politically well-represented, well-heeled
minorities whose interests would be harmed. Now, with economic performance seen as the
deciding factor in 2002, the government is obviously concerned the recovery may not be
strong enough to propel its candidate to victory. Still, President Cardoso's comparison
with the "miracle" years seemed like a rather simplistic attempt to make things
appear to be better than they actually are—or may be, since we're still talking about
projected GDP growth for 2001...
None of this goes unnoticed in the opposing camp, as it pushes in the other direction.
Barely a month after newly-elected mayors took office throughout Brazil, a trend visible
when the municipal elections were held last October is gradually taking hold among the
more prominent mayors who belong to the left-wing PT, the Worker's Party. As results came
in and confirmed the party's good performance at the polls, many of the mayors and
councilors-elect indicated their "concern" with federal economic policies, and
their negative effects on the municipalities they were about to take control of.
Barely a month after they've all taken office, these "concerns" are quickly
becoming a favorite excuse for all that's wrong with cities now governed by PT members.
The approach by mayors and councilors in different cities is so similar that it would be
childish to imagine it's all just a coincidence. Clearly not: this is how the PT has begun
to try and chip away at any gains the federal government might want to capitalize on come
2002, because of an economic recovery that hasn't even existed long enough to be properly
assessed.
Last week, the mayor of São Paulo offered up a selection of quotes that illustrate
what appears to be a nationally-orchestrated early strategy aimed at 2002. The very
visible Marta Suplicy is well aware that as mayor of Brazil's largest city, her words
weigh far more than those of her colleagues elsewhere in the country. This is how she
responded to a comment by President Cardoso, that she ought to do "less whining"
and stop blaming others for the problems faced by her city:
"Today, the city has this level of violence and unemployment not so much
because of policies developed in the city of São Paulo proper, but as a consequence of
the economic policies of the federal government"
"I believe the federal government must share responsibility for the city's social
policies, because the difficulties the city is facing are a consequence of an overvalued
currency and high interest rates, which resulted in enormous unemployment in our
city"
Just as President Cardoso's comparison with GDP growth in the 70's was a stretch, so is
any attempt to blame the federal government, primarily or exclusively, for local problems,
especially in São Paulo—a city that has just emerged from two consecutive
administrations in which widespread corruption schemes were the norm. Mayor Suplicy was
elected largely on her pledge to deal with that, and certainly not because 60 percent of
"Paulistanos" have swung to the left. She would do well to check the numbers on
the effects of federal policies as well. Figures from IBGE, the Brazilian Institute of
Geography and Statistics quoted by former Central Bank President Gustavo Franco in his
Sunday column for the daily O Estado de S. Paulo are most telling. They show that
between 1993 and 1999, 5.2 million people rose above the poverty line, while incomes grew
by as much as 33 percent between 1993 and 2000—all thanks to those federal policies
Mayor Suplicy would like everyone to condemn.
These are early developments, and a lot can change between now and election time in
late 2002. But Brazilian voters would do well to push as of now—more than that, to
demand a different approach from would-be candidates and their parties. Otherwise, voters
will surely be facing yet another low-quality campaign in 2002, with vague proposals,
ill-defined platforms, and the usual abundance of mud-slinging. Growth remaining at
projected levels, the government will be doing its best to make the numbers appear to be
more and better than they actually are. And the opposition will yet again try to discredit
the government's economic policies—a strategy that failed miserably in 1994 and 1998,
and won't improve simply because a few well-placed mayors are willing to help deliver the
message.
Adhemar Altieri is a veteran with major news outlets in Brazil, Canada
and the United States. He holds a Master's Degree in Journalism from Northwestern
University in Evanston, Illinois, and spent ten years with CBS News reporting from Canada
and Brazil. Altieri is a member of the Virtual Intelligence Community, formed by The
Greenfield Consulting Group to identify future trends for Latin America. He is also the
editor of InfoBrazil (http://www.infobrazil.com), an English-language weekly e-zine with
analysis and opinions on Brazilian politics and economy. You can reach the author at editors@infobrazil.com
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