Brazil paper of the day

Understanding how Brazil successfully faced the 2009 global crisis is interesting because the country is currently the 10th largest economy in the world and should climb new positions in that ranking in the years ahead. The recession lasted only two quarters in Brazil, followed by the creation of a million new jobs in 2009 and the expectation of 7 per cent GDP growth in 2010. For the first time in many years, instead of getting pneumonia when the rest of the world got a cold, Brazil fared better than most countries. This paper argues that this was the result of many years of accumulating strength through fiscal discipline and structural reforms, together with special features of the present crisis. The text, written from a practitioner stand point, summarizes the response of the Brazilian government to the crisis, highlighting factors that may help explain its success and the risks ahead. It also reviews options to leverage structural factors favoring growth in the coming years and the much yearned reduction in interest rates. It argues that priority should be given to keep fiscal responsibility and promote third-generation reforms to, inter alia, better use the excellent financial infrastructure that already exists in Brazil to fund much needed investments.

That is the abstract of the paper "The First Time You Never Forget: The Success of Brazil in the 2009 Crisis and the Need for Third-Generation Reforms" by Ferreira Levy