Julia E. Sweig, Nelson and David Rockefeller Senior Fellow for Latin America Studies and Director for Latin America Studies
The Brazilian government faces a number of challenges and opportunities concerning its economic forecast in the coming years. After peaking at 7.5 percent growth in 2010, Brazil's recent economic slowdown has caused worry that the dream of a new high-growth economy had slipped out of reach.
Indeed, that high level of growth was unsustainable and there are significant obstacles to its continuity: inadequate infrastructure, the infamous "Custo Brazil"—a slew of taxes and regulations that raise the cost of doing business—and a shortage of skilled labor, to name a few. And Brazil is now importing oil and ethanol to meet its growing consumer demand.
The Brazilian government is serious about confronting these bottlenecks. In February, President Dilma Rousseff slashed electricity taxes and is now opening Brazil's ports and transportation systems to private investment. With three rounds of oil and gas field auctions slated for 2013, Brazil may become one of the world's top oil exporters by 2020 (although lags on that front are cause for concern). Brazil is also investing in its human capital with plans to increase public education spending to 10 percent of GDP through initiatives such as Science without Borders. Plans also include expanding Bolsa Familia, a social assistance program credited with moving forty million Brazilians out of poverty since 2003. Furthermore, the upcoming World Cup in 2014 and Olympics in 2016 put Brazil under the global microscope, which will prove an incentive to reduce corruption and crime.
Fulfilling these domestic imperatives will strengthen Brazil's case for a more significant economic presence abroad. Brazil will leverage its leadership in Latin America and in "South-South" cooperation with the BRICS (Brazil, Russia, India, China, and South Africa) and Sub-Saharan Africa in negotiating a framework for climate change post-Kyoto Protocol and reform of the global financial architecture and multilateral institutions.