Ordem e Progresso or Order and Progress. An instantly recognisable motto, visible on the flags and carved into the edifices of Brasília, Brazil’s seat of government. Formed in 1960, the federal capital’s inception arose from the rampant overpopulation of the country’s eastern seaboard, consequently meeting a demographic and constitutional demand for relocation to the country’s interior.

Yet some things never change, and as one of the most dynamic emerging markets in the world, Brazil’s population and financial activities focus primarily within the two economic behemoths of Sao Paolo and Rio de Janeiro. As a BRIC economy, it has been estimated that by 2050 the Latin American giant could be among the four most dominant economies in the world, a startling figure given the country’s major debt problems during the early 1990s.

 …its robust and aggressive ascent…

Is Brazil the next Super Power?

Originally built upon coffee, sugar and gold, Brazil sits atop a veritable fortress of natural resources, commanding a position of economic authority throughout the America’s that is second only to the United States. Billion dollar investments into hydroelectrics and infrastructural rehauls have only cemented the nation’s seemingly strong position as the Western Hemisphere’s golden child, thereby securing the country’s transcontinental dominance for years to come.

All, however, is not as it seems. With a rapid slowdown of growth rates to 3%, the IMF predicts that Brazil will be Latin America’s second slowest growing economy in 2011, a puzzling statistic given its robust and aggressive ascent to being the 7th largest economy in the world. What, therefore, is diminishing the progress of this potential superpower and thus mitigating its impact on the world stage?

 …the nation’s leaders’ clear inability…

According to Minister of Finance, Guido Mantenga, it is the “persistently loose economic policies” of the global economy’s more developed European and Asian nations that have been the main impetus for such a dramatic slowdown. His argument is further bolstered by the Bovespa’s 20% drop in value, thus highlighting another problem catalysed by European uncertainty regarding the future of the single currency. Yet to blame the country’s current woes on such an uncertain market environment would be inept.

It is, in fact, the nation’s leaders’ clear inability to push through any meaningful reforms that are at the heart of this Cause célèbre. Indecisiveness to change the country’s myriad of complex taxation laws, alongside an unwillingness to instigate desperately needed reforms to public pension plans are all pressing issues that must be addressed. A looser fiscal policy has to be implemented, lest we are to see even further rises in the country’s 7.3% inflation rate.

 …could prove dangerous…

Is trade and tourism in trouble?

Alongside such problems lie similarly high interest rates on consumer debt, a clear result of a new and financially naïve middle class, once enticed by the generous investment of private equity from abroad, now unable to pay back the multitude of loans accrued through such unrestricted lending policies. Even Shell’s $1.6bn venture into the BC-10 Block of the Campos Basin comes at a price.

With such strong interest in south eastern oil fields comes news of a major housing boom in Rio, and with it, an almost doubling of the nation’s mortgage lending. This is, therefore, no time for complacency, with both domestic problems and those from further afield having a realistic ability to put the Brazilian economy in potential danger. High interest rates leave the real (R$) susceptible to being overvalued, while the economy’s over-reliance on commodity exports – once a major strength – could prove dangerous if the country becomes too reliant on domestic consumption.

 One thing the global community can be sure of…

Yet the Latin American giant has so much potential. Irrespective of potential housing booms, discovery of oil could propel the nation to the 5th largest oil exporter in the world, alongside capitalising on the swathes of arable land that are yet to be exploited, an initiative that would rapidly bolster the country’s already booming agricultural industry. One thing the global community can be sure of, therefore, is that Brazil is one to watch, a potential superpower that if lead down the road of Ordem e Progresso could most certainly play a pivotal and intriguing role in global affairs. Now is the time to act. 

Images courtesy of NASA and The Brazilian Tourist board

 

About The Author

Modern Languages student at UCL with an interest in Current Affairs and Sport.

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