Brazil and the Crisis
The B of the BRIC, Brazil was supposed to be one of the strongest economies of the World.
Suddenly, the Crisis teetered all prophecies. In one year, Bovespa went down more than thirty percent and all the analysts revised their predictions for 2009 Brazilian economic growth.
Some analysts (such as Morgan Stanley) are even talking about the shrinking of the Brazilian economy.
Right now the Brazilian Central Bank works under the assumption of 3.2 percent growth in 2009, Lula and the Brazilian government are talking about 4 % growth and Economist's prediction is of 0.6 %.
Veja
The Brazilian magazine Veja published some reasons to be confident in Brazil's future:
1. 200 billion untouched 
dollars reserve
2. Competent and regulated banks with low risk policies
3. No real state bubble
4. Strong internal market and increasing buying power of the population
5. Green power
6. Political stability
7. Economic stability
8. Largest exporter of food of the world, which ensures large external sales
9. Diversified external market
10. The same forecasts predicting World stagnation are estimating growth for Brazil
They touched important issues and the whole article is very well founded and interesting. Even so, Brazil is not the only country in the World with political and economy stability in the World. Neither is the only one with serious bank policies. So what makes Brazil unique? What causes this country to be an Oasis in the current World crisis?
Brazil also has serious problems to solve: government expenses, the well known problems of political corruption and the very organized, fearless and arrogant organized crime.
What makes Brazil Unique?
The points of Veja are important but there is more: Brazilians know how to manage a crisis.
The experience has teached them. Brazil has been in and out crisis for the last sixty years. It is dificult to explain but a crisis does not really affect the daily routines in Brazil. Some people get fired, some get richer, other die from cold and faim and life continues (or not).
In 1999, I was in Rio on January 15th. In one day the dollar went from 1 point something to more than two reais. For some time the governement has insisted on a policy of strong real but on this day they decided not contain the currency anymore and let it go free, with no governamental intervensions. In any other country people would go mad. I have been interacting with people the whole day, working and shopping and nobody mentioned anything. I was surprised that I received a very good rate for my dollars and the Visa did not work at one shop.
That was it. Nobody even talked about it. Only at the end of the day I heard it on the news.
It is not that the Brazilians are calm – from time to time they have proved they can rebel and put fire on things. They look at crisis in general as a problem to solve.
Today, the whole state of mind found throughout the World is in total contrast with the business as usual attitude in the streets of Brazil.
The crisis also did not impact their lives so much. Ask any taxi driver in Tel Aviv they will tell you that business is down to half of the volume. I asked Brazilian taxi drivers the same question last week and they all told me that they are not affected by the crisis.
The attitude is very important confronting a crisis, but Brazil's strongest point is the internal market.
Increasing Buying Power of the Population
No doubt the development of China brought Brazil a lot of benefits and export of goods increased in the last years and contributed to the Brazilian success. But the external market is only 14 percent of the Brazilian GDP. The price of commodities and the volume of export affect the economy but that is the proportion - 14 percent.
The internal market is the the main reason of the Brazilian growth.
The politics of the economy brought wealth to the people. It caused an incredible development and will continue to be the main factor of the continuation of this process.
In 1992, I was in Belo Horizonte and saw real misery in the faces of the people. My cousin told me she was afraid to live there – "I was born here and I lived here all my life but I am afraid to go to the center of the city".
Today in the same place you can see people well dressed and healthy faces. It is not Zurich and they are not wearing Prada but it is a completely different scene.
It started with the Plano Real. Fernando Henrique Cardoso, as the minister of the treasure, pratically stopped the inflation. In the subsequent years the poor layers of the population more than triplicate their buying power. It not only helped their situation – it brought a revival for the whole economy.
Fernando Henrique Cardoso was elected president and after him Lula. He continued Fernando Henrique's policy but emphacized the strengthening of the working class.
They are political adversaries but in a conversation in the Tel Aviv University Fernando Henrique told the audience that "Lula continued my policies. He hates when somebody says it. But he was more successful than me spreading wealth. I am impressed with his success".
The Brazilian governement is fighting poverty and using the event as a tool of developing the whole economy. The increasing number of people joining the middle class and the continuous improvement of their lives is the core of Brazil's success. This process had not stopped. On the contrary, not only projects such as Bolsa Familia and the Growth Acceleration Program (started on 2007) continue but also the governement started investing on infrastructure programs and accelarating the housing building.
Concluding
The crisis has slowed Brazil, but it has not stopped its growth. Only time will tell us if the economy will shrink or it will growth 4 % like Lula says.
I and more than 80% of the Brazilians are betting on Lula.