The Brazilian Secretary of the National Treasury, Joaquim Levy, released simulations today to dispute data from World Economic Forum (WEF) reports that “convey important information about the global economy but apparently cast Brazil in an unfavorable light.”
According to the WEF report (www.weforum.org), Brazil is hardly competitive and attractive to foreign investors. The National Treasury’s simulations are available on the website www.stn.fazenda.gov.br.
According to Levy, however, a more careful analysis of the WEF report reveals that Brazil’s drop in the competitiveness ranking is essentially the result of weaker economic indicators in 2002-03.
In the Secretary’s analyses this is a delayed reflection of the external shock that Brazil suffered in 2002 and has been compensated since then.
Levy recalled that the report is quite positive about technology in Brazil and good governance in the public sector.
Without ignoring that there is still room for reforms, Levy underscores all that was done along these lines in the first 20 months of President Luiz Inácio Lula da Silva’s Administration, as well as the insistence on fiscal responsibility and monetary control to overcome imbalances rooted in the decade of the ’80’s.
Moreover, he emphasizes the decline in the debt/GDP ratio for the second consecutive year and the forecast for economic growth this year in excess of 4%.
The -0.2% growth in 2003 was precisely the indicator most damaging to Brazil in the WEF report. Whereas the country is traditionally classified between 40th and 60th place for most of the variables, it came in 75th on the macroeconomic index.
The Treasury document also calls attention to the fact that the risk analysis indicator generated by the WEF’s research is subjective, but “the results of the research can affect the price of Brazilian assets and the appetite of foreign investors.”
For Treasury experts, however, it should be noted that the percentage of investors who consider Brazil a high-risk country fell from 54%, at the beginning of this Administration, to 35%.
According to Levy, “the relatively high perception of risk should doubtlessly be viewed against the fact that Brazil is a well established democracy that has received foreign investments for over a century and has not experienced social convulsions.”
Finally, the Secretary emphasizes, in the name of the government, that, “looking ahead, Brazilian authorities are convinced that the success of the agenda of reforms, the robustness of the country’s institutions, and the absence of relevant political or social risks in the region will be relevant factors protecting the Brazilian economy from eventual shocks in capital flows or other macroeconomic shocks in general.”
Translator: David Silberstein