Brazil Expected To Weather Economic Downturn
RENEE MONTAGNE, host:
When the economic meltdown began spreading beyond the U.S., the president of Brazil scoffed. He called it Bush's crisis and suggested Brazil was immune. Well, it turns out that Brazil, like the rest of the world, is not. That country's once surging stock market got hammered. Still Latin America's biggest economy is more diverse and well-run than in the past, and so Brazil appears better prepared than most to weather the storm. NPR's Juan Forero reports from Brazil's financial capital.
JUAN FORERO: Like seemingly everything else in this vast country, the Port of Santos is big, the biggest in South America in fact. It dispatches soybeans, iron ore, airplane parts, and citrus products to the world. And it's growing. A $162 million project envisions dredging new roads and rail lines - all necessary for a port that's seen exports increase by 58 percent in five years.
The expansion at the port attests to Brazil's coming of age as an economic force. Under President Luiz Inacio Lula da Silva, Brazil has posted impressive 4.5-percent-a-year growth rate since 2004, and Brazil now sees itself on a par with China, India, and Russia. Indeed, Silva will be among the world leaders expected to assert himself at an economic summit hosted by President Bush on Saturday, a meeting designed to discuss solutions to the worldwide financial crisis.
That crisis has lead to a drop in demand for Brazilian commodities and a serious credit crunch. Economic growth is expected to fall from 5.4 percent in 2007 to three percent next year, and some say that could thwart Brazil's grand plans for now. Rubens Ricupero is a former finance minister.
Mr. RUBENS RICUPERO (Former Finance Minister, Brazil): I think the effect will be severe, not to the point of generating a technical recession, but it will force a considerable, considerable deceleration, a slowing down of the Brazilian economy.
FORERO: Worldwide economic crises used to batter Brazil, the oil shocks of the '70s, the Asian crisis of the '90s. But while Brazil may not be insulated now, economists say it's better prepared than ever to confront the tough challenges ahead. It has 200 billion in reserves and sound fiscal policies.
(Soundbite of Brazilian Stock Exchange)
FORERO: The crazed activity on the stock exchange is a sign of Brazil's economic might. Bruno Miranda(ph) is a 37-year-old hedge fund manager who once worked in New York. He now runs MIRA Capital Fund(ph).
Mr. BRUNO MIRANDA (MIRA Capital Fund): On the long run, I think Brazil is going to come out stronger from this crisis. The country has a lot of innovation with biodiesel, with fuel, ethanol products that we're having to develop, and projects that will make the economy grow.
FORERO: Many businessmen here rave about what they call the steady, prudent economic policies of President Silva. A former metalworker and union leader, he's among a slew of left-leaning leaders elected in Latin America this decade. But Silva turned out to be a fiscal conservative, running budget surpluses and controlling inflation. Under Silva, the poverty rate has fallen to 1992 levels, and the poor have bought their first cars and homes.
(Soundbite of music)
FORERO: In Paraisopolis, a neighborhood here, the beauty salon called Eliza's Haircuts(ph) is packed with customers. Maria Liza Dante da Silva(ph) washes a customer's hair. And Silva talks about how she's been able to buy a car, a house, and expand her shop.
MARIA LIZA DANTE DA SILVA (Brazilian Hairdresser): (Portuguese spoken)
FORERO: She says her life has gotten better and she feels confident about the future. Sometimes it's hard to fathom that things could go wrong in this country. Brazilians always seem to be buying, accumulating, building.
(Soundbite of music)
FORERO: That drive to consume is never more apparent than at the Sao Paulo car show, with its slinky models and blaring music. Car sales, after all, have grown dramatically since 1999. Renaldo Teqsaeda(ph) was mesmerized by a new red Toyota.
Mr. RENALDO TEQSAEDA: (Portuguese spoken)
FORERO: But he said he was just looking, and he wasn't going to buy. And he said others wouldn't buy either. The statistics, in fact, bear him out. Car sales are falling fast. It's a clear sign of the times. Juan Forero, NPR News, Sao Paulo.
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