Brazil: Signs of affluence
Visiting Brazil is my first experience of being in a BRIC country.
I have never been to Russia, India or China, the other three countries that make up the BRIC acronym, so I was intrigued to see what an economic success story looks like.
The BRIC term was famously concocted by Goldman Sachs who predicted that by 2050 the combined economies of Brazil, Russia, India and China would likely become the dominant global economic force. That said you hardly need to be a clairvoyant to see that China alone will become the global dominant economy by 2050. Still, putting the four countries together as an economic and political grouping is very interesting. Goldman Sachs came up with the acronym to describe the economic potential. The leaders of the four countries got together last year in Yekaterinburg for their first summit and are to meet again next month in Brasilia. That’s the political potential.
That by 2050 economic and political power will have shifted from the old economies of Europe and the US to the four countries that make up the bulk of the world population is not hard to imagine. To start with, there is the question of size. All four countries are large geographically and have huge populations. Together they make up 25 percent of the world’s land mass and account for 40 percent of the world’s population. Add to that vast natural resources, a combined GDP of more than $15 trillion and huge and rapidly growing domestic markets. They are quite simply the world’s biggest and fastest growing economies.
Indeed the sheer size of the country and its population is the first thing I noticed when I arrived in Brazil. It is a place of great natural beauty brimming with natural resources but at first sight it is hard to see the success story.
My first port of call is Rio de Janeiro, possibly the most beautiful city I have ever visited but also in some respects the most disconcerting. As a tourist you are warned to be not just careful but weary, making you constantly aware of potential danger, and consequently it is hard to feel entirely relaxed. As a human being it is hard not to feel distressed at the sight of the sprawling Favelas where hundreds of thousands live in enduring misery. I was shocked to see that there are now Favela Tours on the tourist trail. I find the idea that the Favelas have now become a tourist attraction somewhat obscene. And though the middle class is growing fast, one in four remains below the poverty line.
All the stereotypes are quickly confirmed. First, of course, there is the beach culture with the women wearing the tiniest bikinis I have seen. Young or old, slim or fat, they all wear them and look so at ease that you soon forget how odd it is to see so much flesh on display. Then there is the national passion for football. In Rio, I saw them play on the beach, in the street, in parks, anywhere they could kick a ball. In Brasilia I noticed how the villas of the rich often have their own football fields. Then there is the samba and the capacity to party. Brazilians are a fun-loving people. It is just as you expect it to be.
What you don’t expect are the prices. The days when Brazil was a cheap place to visit are long gone. A cup of coffee in Rio is as expensive as in New York or Paris. Entrance prices to the main tourist attractions are priced in the same range as tourist attractions in London. Hotels may be run down but room rates are comparable to other large cities.
What is more, locally-made goods are not cheap either; quite the opposite. Brazil has now shifted toward the higher end of the quality spectrum. Boutiques are full of shoes, handbags and dresses by Brazilian designers. I tried on the most exquisite and, as it turns out, most expensive pair of shoes ever to have graced my feet. When the saleswoman told me the price, I gasped: 1600 reais, that’s $900. It did not look like a designer boutique to me, just a regular fashion outlet. Of course, there are also places where you can buy more affordable shoes. Not everything is so outlandishly expensive, but there is definitely consensus that Brazil has become much more expensive.
The high prices are a sign not of inflation but of economic growth. The Brazilian economy is thriving. It was one of the last countries to be hit by the financial crisis and has been one of the first to emerge from recession. The Brazilian central bank predicts economic growth of 5 percent for 2010. Brazilian GDP stands at $650 billion, and GDP per head is $7,600. Brazil has three companies in the Forbes Top 100 and 31 in the global 2000. However poverty and income inequality remain serious problems in Brazil, with the crime and security issues that naturally follow.
Just like other BRIC countries, the Brazilian economy has benefited from taking a decisive shift toward free market economics. They have opened up their markets, encouraged foreign investment and invested in education and science and technology. They have maintained a stable currency, followed fiscal responsibility and shifted from being a net recipient of IMF loans to being an IMF donor. Brazil also follows a policy of international engagement. It is not isolationist by any means and actively pursues diplomacy and cooperation.
Brazil can best be summed up by its charismatic leader. President Luiz Inacio Lula da Silva or Lula is a former trade union leader who has become a moderate pragmatist since coming to power. Though he remains committed to improving the lot of the poorest, he has resisted the temptation to follow a populist agenda, focusing instead on social reforms and on specific social programs, most notably a program to eradicate hunger and a large-scale assistance program known as Bolsa Familia. He has also become a key player on the world stage and has been given several prestigious awards.
What strikes me most about my short experience of Brazil is the journey. When you consider what it once was and where it is heading, you can only be impressed. Chances are by 2050 it will not only be a leading world economy but also a country with an educated population where millions have moved from poverty to relative prosperity.
(ik511@hotmail.com)
