What Will A Second Term For Lula Look Like?
For Immediate Release: September 22, 2006
Contact: Mark Weisbrot, 202-746-7264
Dan Beeton, 202-256-6116 (cell)
WASHINGTON - The Center For Economic and Policy Research (CEPR) today released its issue brief, “Brazil’s Presidential Election: Background on Economic Issues”.
The paper looks at the last four years of economic policies and results
and considers what changes in economic policy might take place in the
next few years.
"The big challenge for Brazil will be to
restore reasonable economic growth, to bring to an end the 25-year
economic growth failure that has plagued the country,” said economist Mark Weisbrot, Co-Director of CEPR and principal author of the report.
Brazil’s GDP per person has grown only 11 percent
over the past 25 years, or less than one half percent annually. By
comparison, from just 1960-1980 it grew by 123 percent. The paper notes
that if Brazil had continued growing at its pre-1980 rate, which was
nowhere near the fastest among developing countries, it would have
European living standards today.
Per capita income has grown about 1.4 percent
annually for the Luiz Inácio Lula da Silva (“Lula”) presidency, about
the same as during the previous 8 years of Fernando Henrique Cardoso’s
presidency. This was enough to match the expansion of the labor force,
but not enough to make a dent in the country’s high unemployment rates.
“Of all the policies stifling growth in
Brazil, the excessively high interest rates set by Brazil’s Central
Bank are probably the most destructive,” Weisbrot noted.
Short-term rates are currently set at 14.25 percent, as compared to
5.25 in the United States, despite the fact that the two countries have
about the same rate of inflation (Brazil’s is slightly lower).
The report looks at monetary and exchange rate
policy, the “Bolsa Familia” anti-poverty program and other policy
measures implemented in recent years. The analysis indicates that
achieving significant reductions in poverty and unemployment will be
difficult or impossible without macroeconomic policy changes that can
restore healthy rates of economic growth.
To read the full text of the report, click here.