Thursday 4 July 2013

Brazil Crisis.

Brazil Latin America's biggest country has had massive protests last week.
Brazilians are railing against poor public schools, hospitals and transport. They are protesting soaring prices, crime and corruption. They are lambasting a political class so self-satisfied that it failed to see, much less address, the mounting dissatisfaction that led to the protests.

Combined, the concerns reflect growing unease among Brazil's nearly 200 million people that the country's long-promised leap into the developed world has fallen short once again.
The demonstrations, sparked by protests against a rise in public transport fares, at first drew mostly educated youth from Brazil's traditional middle class, a minority that historically has had more in common with a wealthy elite than the nearly 100 million Brazilians who until recently formed the ranks of the poor.
The demonstrations took off, though, when Brazil's "new" middle class joined the fray. "This is the discontent of people for whom having enough rice and beans on the table no longer comes as a surprise
Booming commodity exports, a consumer binge and ambitious social welfare programs together fueled a decade of steady economic growth that lifted 35 million Brazilians from poverty. But now, as the economy cools, many among the new middle class say their much-vaunted ascent leaves a lot to be desired. 
The notion of middle class in Brazil broadly includes include almost anyone able to pay rent, put food on the table and perhaps pay a monthly installment on the refrigerator, microwave or television that Brazil's government often touts as a sign of their emergence. The so-called "Classe C," the bottom rung of Brazil's , about $790 a month, and, unlike the much-smaller upper middle class, relies largely on public transportation, health services and schools.
Those who can't afford private health insurance - and most Brazilians can't - are at the mercy of public hospitals that often lack sutures, spare beds and, increasingly, doctors, some of whom are so disgusted with the public health system that they limit their work to private providers. 
After average yearly economic growth of more than four percent during Lula's two terms, average growth through the end of Rousseff's term isn't expected to exceed much more than two percent. Inflation, a longtime concern, has crept back up to an annual pace of 6.5 percent.
 It is worth to note that Lula's two terms where in the period of a super boom in the price of commodities,high foreing direct investment to emerging markets, and the start of the discovery
of important oil reserve in deepwater oil fields in the coast of Brazil.
Brazil's boom is also exhausted. Demand for raw materials from China has slowed.
Brazilian consumers, meanwhile, are more burdened by debt than at any time since the central bank began measuring household credit. Growing defaults last year led banks to cut back on lending.
The slowdown muddles the message for a government accustomed to telling its citizens - indeed, the entire world - that Brazil has finally made it.
As recently as April, Rousseff was pledging that per capita income would double by 2022 - never mind that economists say that would require average annual growth of at least 6 percent until then. Two important  events in Brazil, the 2014 World Cup and the 2016 Olympics, are now having increased criticism because of the more than $25 billion needed to host them.

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