Analysis

Brazilian Economic Development

The history of the country from colony era to current political and economical scenario.

1889–1930 – The Old Republic

  • Governments linked to the agricultural sector;
  • “Coffee and milk” Policy from the São Paulo and Minas Gerais state governments;
  • “Revolution of 1930” marked the end of the Old Republic.

1930-1945 – The “Vargas Era”

  • Creation of the Ministry of Education and Health;
  • Creation of the Ministry of Labor, Industry and Commerce;
  • Creation of Labor Policies (Consolidated Labor Laws (CLT));
  • Coffee appreciation policy.

1945-1964 – The Populist Republic

  • Establishment of Petrobras;
  • Creation of Petroleum Law;
  • Infrastructure plan;
  • Industrial development;
  • Construction of Brasilia: Brazil’s new capital.

1964-1985 – The Military Government

  • Governmental Economic Action Program (PAEG);
  • Investments in state-owned enterprises;
  • “Economic Miracle” Period.

1985- 1992 - The Republican Era

  • “Cruzado” Plan - aimed at stabilizing prices;
  • “Collor” Plan - aimed at stabilizing prices;
  • SNE - National Privatization Program;
  • Collor’s impeachment.

1992- 1995 -The economic stability of the “Real Plan”

  • The new Brazilian Economic Stabilization program ("Real Plan") is the most extensive economic plan so far implemented in Brazil. It is the most efficient economic stabilization plan in the country’s history, reducing inflation (the main objective), increasing the population's purchasing power and reshaping national economic sectors. It was launched during Itamar Franco’s administration.

1995-2002 – Reform of the Brazilian State

  • Consolidation of inflation control;
  • Privatization (telecommunications, electricity, mining and banking sectors);
  • Macroeconomic Tripod (floating exchange rate, inflation targets, fiscal balance);
  • Creation of regulatory agencies;
  • Creation of the Fiscal Responsibility Law.

2003-2010 – Economic and social growth through the economic stimulus policy

  • Low inflation (control through macroeconomic tripod);
  • Reducing unemployment rates;
  • Trade balance record (boom of commodities);
  • Income distribution programs (“Bolsa Família”);
  • Growth Acceleration Program (PAC 1);
  • Anti-cyclical policies (international crisis);
  • Automotive industrial and credit policy.

2011-2014 – Investment expansion policy

  • Continuing investments in infrastructure plans (PAC 2/ PIL1);
  • Low-interest policy and investment stimulus ;
  • Low-charge electricity policy and change in sectorial rules;
  • Industry subsidy policies;
  • Internal manufacturing promotion policies ;
  • Continuity of welfare programs (“Bolsa Família”).

2015 – 2016 – Recession and the end of the economic stimulus policy cycle

  • A number of motives such as the Brazilian population’s discontentment with the Partido dos Trabalhadores (PT – Dilma’s party) and the Brazilian systematic political corruption, as well as the lack of credibility and economic results for the business areas that adopt the economic model set out in the economic stimulus policy, gave rise to a series of economic and political difficulties. Notwithstanding the austerity measures adopted in an attempt to revive the economy, the economic environment and forecasts remained pessimistic in the initial years of Dilma Rousseff’s administration. GDP dropped -3.8% compared to 2014. This fact resulted in problems, such as increased unemployment rates, lower consumer spending and inflation of approximately 10%;
  • On August 31, 2016, the Senate approved the removal from office of President Dilma Rousseff with 61 votes in favor and 20 against. Hence, the presidential mandate of Michel Temer has officially begun, thus ceasing to be a provisional mandate;

2016 - 2018 – Overcoming the unstable scenario

  • Fiscal adjustments to reduce the government spending and policies to control inflation;
  • Continuity of welfare programs (however, a small reduction in budget is expected);
  • Policies to recover growth in the medium term (2017-2018);
  • Improve the bidding processes and concessions to raise private, national and foreign investments in infrastructure.
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