According to Brazilian president Dilma Rousseff, Brazil is moving into an ‘era of prosperity’ characterized by ‘income distribution and a notorious drop in inequalities.” That’s what she said in her first 2012 radio edition of ‘Breakfast with the President’, where she also dared to use the word ‘protection’ in reference to jobs and the domestic market.
“With planning and the right policies we are managing to protect our economy, our production sectors and above all jobs,” said the President.
Brazil in the last months of 2011 announced a series of measures to restrict imports of industrial goods and earmarked billions of dollars in tax exemptions, to stimulate exports.
“In a year when almost all countries lost jobs, we created over 2 million jobs. In a year in which the great world powers are having negative growth, we are going to have a good expansion,” added Rousseff.
Nevertheless some budding data shows that the impact of the euro crisis and slow growth in the US is arriving to Brazilian shores.
The Focus bulletin from the Central Bank shows that Brazil’s GDP expanded 2.87% in 2011 and is expected to advance 3.2% this year, which is 0.1% less than announced a week ago.
Far distant from the 5% anticipated by Economy minister Guido Mantega only a month ago. However President Rousseff was careful not to get tangled with numbers and percentages.
“In spite of all difficulties, thank Heaven, 2011 was good and almost certainly this year will be even better, I’m convinced we can keep advancing” said the President.
“Brazil is moving into an era of prosperity characterized by income distribution and a notorious drop in inequalities”, said Rousseff.
When Dilma took office a year ago she started with significant budget cuts (30 billion dollars) defined as “fiscal austerity” and a commitment to the good health of Treasury accounts for which the Selic basic rate had climbed to 12.5% by mid year.
But a year later Rousseff is promising “descending interest rates” with lower debt payments, which also makes analysts feel that the Selic might reach one digit, something which has not been seen in Brazil for decades.
This policy has strong supporters in Economy minister Mantega, his peer from Industry, Fernando Pimentel and the president of the Development bank, Claudio Coutinho.
This group together with President Rousseff are more identified with the so called “economic development” policy with a strong intervention and support from government, contrary to the more ‘monetarist’ and free enterprise sector predominance that could be represented by Central bank president Alexandre Tombini, who nevertheless seems to have succumbed to the other group’s influence.
This could be a crucial observation of what can be expected form Rousseff and Mantega since in the eight years of Lula da Silva, from 2003 to 2010, Central bank president Henrique Meirelles implemented an interest rates policy with far greater independence and distance from the ministries of Economy and Industry.