The Legatum Institute was pleased to host a conversation with Irene Mia of the Economist Intelligence Unit (EIU) and Simon Schwartzman of the Instituto de Estudos do Trabalho e Sociedade to discuss growth and investment opportunities in Brazil
Irene Mia and Simon Schwartzman took part in an in-depth look at a country that has the potential to become one of the largest, most dynamic economies in the world, but must first learn to navigate political, social and economic hurdles.
The discussion was moderated by Nathan Gamester, Programme Director for the Legatum Prosperity Index.
Mia opened the discussion by observing that Brazil had been “trapped in a period of under-average growth”. Brazil has faced inflation of around 7 per cent and growth of only 1 per cent. Mia predicted that inflation would remain above the central bank’s target of 4.5 per cent for some time. She blamed a lack of human capital—92 per cent of Brazilian firms had difficulties recruiting suitably qualified staff according to a recent survey—and high crime for deterring investors.
Nevertheless there are some more encouraging economic signs. Brazil is the largest recipient of foreign direct investment in the region and the country also benefits from low unemployment, natural resources and favourable demographics.
Mia concluded her presentation by highlighting some of the factors which threaten to squander the country’s advantages.
[SLIDES: Brazil: What comes next? The political and economic outlook post the World Cup, by Irene Mia, PDF]
Schwartzman argued that the country needed to generate more inclusive growth in the future. Key to this was political reform: Schwartzman emphasised that political institutions in Brazil lacked legitimacy because of corruption. The “erratic policies of the government” drained investor confidence, he said, and many of the country’s problems, from infrastructure to education were “questions of making public investment more efficient”.
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