Just a few years ago, Brazil was celebrated as one of the world's economic success stories. Using its extraordinary resource wealth as a foundation, the Brazilian economy was expanding three times faster than that of the United States, poverty was shrinking and employment was on the rise. As Latin America's largest economy, Brazil was poised to lead the region in a new resurgence. The country's prospects were so bright that it was identified as one of the BRICs — along with Russia, India and China — nations that were offering an alternative organizing principle for global governance.
That picture has been transformed, however. Brazil's economy has contracted over the last two quarters and is projected to shrink 2.7 percent in 2015 and again in 2016, the first two-year decline in nearly a century. Brazil's currency, the real, has dropped 35 percent this year, hitting new lows of 4 real to $1. Inflation has been pushed up to 9.5 percent and the budget deficit is now 9.2 percent of gross domestic product. It is reckoned that the country has lost 500,000 jobs this year, pushing unemployment to a five-year high; experts anticipate the loss of nearly 2.5 million jobs by the end of 2016. Companies listed on Brazil's main stock exchange have lost an estimated $1 trillion in value since 2011.
The country's economic situation is compounded by a political crisis that threatens President Dilma Rousseff with impeachment. That combination ensures that there will be no resolution to the unfolding crisis and Brazil will continue to slip and drift.
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