Brazil's Lost Decade

                      This post is a summary of the article with the incomplete title above published in August of 2021   https://www.jacobinmag.com/2021/08/brazil-lost-decade-economy-capitalism-neoliberalism-far-right-politics. The second was published in July 2020 at   https://atalayar.com/en/content/brazil-heading-lost-decade. The third was published in May 2019 at  https://www.bbc.com/news/business-48386415

                    In Brazil's worst decade in more than a century, unemployment, precarious and informal work, poverty, and inequality are all on the rise. A recent issue of the Economist magazine dedicated a long special feature to Brazil's economy and it termed its "dismal" performance over last decade. Among the root causes of the country's current predicament, the article argued, was the recent governments' inability to enact adequate neoliberal reform. The diagnosis from a magazine known as a champion of free-market liberalism, is by no means surprising, but does the analysis hold under scrutiny? While, indeed, the last decade in Brazil has seen tragic economic decline, this is by no means due to a lack of neoliberal orthodoxy. The last ten years should be seen as another "lost decade" for the country, the first having occurred in the 1980s. Over the course of the last decade alone, Brazil has experienced two recessions, one from 2014 to 2016, and another beginning in 2020. Between 2011 and 2020, Brazil's GDP grew by an average of just 0.27% a year. Data from 2020 shows that the country's GDP is 6.4% lower than it was in 2014 and its GDP per capita has decreased by 10.8 % in the same period. Brazil is significantly poorer than it was ten years ago. Brazil is de-industrializing at a rapid rate. At its peak in 1985, manufacturing accounted for 36% of GDP. After the blows of the past decade, industrial production is 12.4% lower than it was in 2011. As of 2020, only 11.3% of GDP is derived from the manufacturing sector. The proportion of high and medium-high tech in Brazil's industrial exports has also regressed from 43% in 2000 to only 32% in 2019, the lowest point since 1995. By contrast, exports in general have doubled since 2000, with China as the main buyer. For the most part, it is "agribusiness" that accounts for these exports. Technologically advanced, agribusiness has meant a massive spike in migration from rural to urban areas. Data shows that underemployment has leaped from 14.9% in 2014 to 28.7% in 2020. All this is occurring at a time when Brazil's wealthy are growing richer. Between 2010 and 2019, the annual profits of the four major banks combined more than doubled, jumping from 38.91 to 81.51 billion reais. In the context of such a debilitated economy, progressives in Brazil are in search of a solution. Developmentalists make the case for the "return of the state"; that is, a return of the state's capacity to intervene forcefully in the economy. But despite the good intentions, this argument is often based on diagnoses that understimate some of the deeper causes of the economic situation. Developmentalists of all stripes cab be prone to paying insufficient attention to the structural problems of Brazil's economy: its subordinate position in the international division of labor and production, its chronic shortage of public and private investments, its stagnant productivity and low-skilled labor force.                                                                                                                                                           Brazil, the giant with a bright future that never arrives, will close in 2020 the worst decade in more than a century, after spending seven years trapped in a maze of political and economic crises currently aggravated by the pandemic. The South America giant will have its second "lost decade" in the last 40 years, after that of 1981-1990, despite having huge hydrocarbon reserves and having one of the most thriving agricultural sectors on the planet. A t the beginning of the decade, Brazil, then governed by Lula, aspired to become a world power. Like other emerging countries, the country hardly felt the global crisis of 2008, its economy adavanced by 7.5% in 2010 thanks to the boom in raw materials. Between 2011 and 2013 growth was more moderate, with a real average rate of 3% per year, but in 2014, the economy began to show signs of weakness. The economic meltdown came in 2015 and 2016, when GDP collapsed by 7%, while in the following three years the recovery has been slow and gradual, with growth of about 1% per year. The world, meanwhile, grew between 2011 and 2020 an annual average of nearly 3% thanks to the emerging economies, led by China. Latin America will close 2020 with a average growth rate of 0.4% over the period. "The weak performance of Latin America is linked to the poor performance of Brazil, whose weight in the region's economy has been 34.5% in the decade", said the economist Marcel Balassiano from FGV.                                                                                                                                      In the previous decade, Brazil was lauded, along with India and China, as one of the emerging economies with fast rates of growth that would surpass developed economies by 2050. The economic performance of this decade, however, suggest Brazil does not belong in that league. A crippling two-year recession in 2015 and 2016 saw the country's economy contract by almost 7%. Economic recovery has been sluggish. In 2017 and 2018, the economy grew at a meage pace of 1.1% a year. And there is still more bad news: Brazilian workers are the ones paying the prices. The number of unemployed people has increased from 7.6 million in 2012 to 13.4 million this year. The official unemployment survey shows that 28.3 million people are underutilised, which means they are either not working or working less than they could. Wages are barely keeping up with inflation. Since the beginning of Brazil's recession in 2015, prices have gone up by 25%. So why is Brazil in such a mess in the first place? The main consensus among market analysts, is that the country started spending too much money around 2013. Since then, one of the main thermometers of Brazil's economy has been the fiscal deficit. During the boom years, Brazil had a debt which was 51% the size of its economy. The growing fiscal deficit raised the debt level to 77.1%. The government says that if nothing is done, the country's debt will be the size of its entire economy by 2023.