Luiz Inácio Lula da Silva, Brazil’s former president, blasted the US and Europe for their lack of political initiative to face the economic crisis and suggested they adopt a strategy similar to Brazil’s.
American and European leaders “should know that a politician should have character, I think they are lacking political initiative. They don’t only have to make economic decisions, but political as well,” the former Brazilian president said.
Lula encouraged consumption to avoid a recession after the 2008 global economic crisis. “We have an extraordinary local market, people are avid to shop,” Lula said.
The ex chief of state indicated he thinks the same way as his successor Dilma Rousseff who is also inviting Brazilians to continue spending and not be fearful of the European and American crisis.
The former Brazilian president also blasted as “wrong” that U.S. and Europe are more interested in giving handouts to save their banks than adopting the necessary political decisions to address the current crisis.
He reiterated that the emerging countries must propose global solutions in the G20 forum where Latin America is represented by Argentina, Brazil and Mexico, and insisted that developed countries should listen and look at Latam recent experience.
“This is our turn and we must help them (EU and US) solve their problems. Because when Brazil, Paraguay and Bolivia were in trouble a group of ‘gringos’ landed every time to tell us what to do,” he concluded, so “now it’s our turn for them to listen to us”.
Japan agency R&I has just upgraded Brazil’s credit rating from BBB- to BBB, the second notch in investment grade level, with stable outlook.
In its report, the Japanese agency highlighted the creation of a robust domestic market due to a rising middle-income households; lower downside risks to the local economy during the external environment turmoil and maintenance of fiscal commitment by the new administration and active management of the monetary policy by the Central Bank.
The Japanese credit rating agency also pointed out to the quick growth recovery from 2008’s international crisis, with a significant GDP growth of 7.5% in 2010 and a perspective of convergence to its potential growth (4%) in 2012.
On the other hand, the agency also pointed out some challenges that Brazil needs to overcome in order to achieve further improvements in its creditworthiness.
Among those are the need to raise domestic savings rate to allow the increase in investments and the maintenance of the efforts to mitigate inflationary pressures.
R&I also points out that next year there could be strong pressure for salaries’ increase from government employees and similarly with pensions which will coincide with the expansion of outlays linked to infrastructure investment for the 2014 World Cup.
However the credit rating agency estimates chances of a significant deterioration of fiscal discipline are reduced.
It is worth to mention that this upgrade occurred during another period of turbulence in external financial markets, which “demonstrates the soundness of Brazilian policy management,” indicates the Brazilian Treasury.
The Brazilian Treasury also recalls that last 20 June Moody’s rating agency upgraded Brazil’s sovereign debt from Baa3 to Baa2 and two months earlier Fitch had done something similar upgrading it from BBB- to BBB.