the new brazil: achievements and challenges edmar bacha yale law school april 17, 2013 1
TRANSCRIPT
1
THE NEW BRAZIL: ACHIEVEMENTS AND CHALLENGES
Edmar BachaYale Law SchoolApril 17, 2013
2
THE NEW BRAZIL IN A NUTSHELL
• 1985: Redemocratization• 1988: New Constitution• 1994: Stabilization and reforms under Cardoso• 2002: Lula’s election and social policies• 2004: Commodity boom• 2011: Middle-income trap sets in?
3
ECONOMIC HIGHLIGHTS
• Inflation and growth record • Recent achievements • Structural challenges
4
INFLATION AND GROWTH RECORD
5
THE OLD AND THE NEW: INFLATION BEFORE AND AFTER THE REAL PLAN
6
INFLATION BEFORE THE REAL PLAN, 1980-1993
7
INFLATION AFTER THE REAL PLAN, 1995-2012
Consumer Inflation (IPCA) - YoY (After Plano Real )
22.4%
9.6%
5.2%
1.7%
8.9%
6.0%
7.7%
12.5%
9.3%
7.6%
5.7%
3.1%
4.5%
5.9%
4.3%
5.9%6.5%
5.8%
0%
5%
10%
15%
20%
25%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
8
GDP GROWTH:SOME RECOVERY AFTER LOST DECADE
1950
1952
1954
1956
1958
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
-5.0%
-2.5%
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
Yearly GDP growth rates (Y')
Y' ten-year moving average
9
RECENT ACHIEVEMENTS
10
POOR FAMILIES’ INCOMES GREW FASTER THAN THE RICH, 1999-2009
1º 2º 3º 4º 5º 6º 7º 8º 9º 10º0
1
2
3
4
5
6
Average: 2,4
Average annual real growth rate of per capita household incomes, by income deciles (from poorest to richest),1999-2009 (%)
11
POOR FAMILIES’ GAINS WERE UNAFFECTED BY THE FINANCIAL CRISIS
(PER CAPITA HOUSEHOLD INCOME GROWTH, 2009-2011)
12
UNEMPLOYMENT IS THE LOWEST EVER (2002-2013)
• 3
• 5
• 7
• 9
• 11
• 13
• 15
•ju
n/02
•ou
t/02
•fe
v/03
•ju
n/03
•ou
t/03
•fe
v/04
•ju
n/04
•ou
t/04
•fe
v/05
•ju
n/05
•ou
t/05
•fe
v/06
•ju
n/06
•ou
t/06
•fe
v/07
•ju
n/07
•ou
t/07
•fe
v/08
•ju
n/08
•ou
t/08
•fe
v/09
•ju
n/09
•ou
t/09
•fe
v/10
•ju
n/10
•ou
t/10
•fe
v/11
•ju
n/11
•ou
t/11
•fe
v/12
•ju
n/12
•ou
t/12
•fe
v/13
13
NET PUBLIC SECTOR DEBT IS FALLING (1991-2013,% GDP)
1991.01
1991.12
1992.11
1993.10
1994.09
1995.08
1996.07
1997.06
1998.05
1999.04
2000.03
2001.02
2002.01
2002.12
2003.11
2004.10
2005.09
2006.08
2007.07
2008.06
2009.05
2010.04
2011.03
2012.02
2013.010
10
20
30
40
50
60
70
Sem Eletrobras e Petrobras Total
14
REAL INTEREST RATES ARE THE LOWEST EVER (1996-2013, p.y.)
12m accumulated
0%
5%
10%
15%
20%
25%
30%
19
96
.01
19
97
.01
19
98
.01
19
99
.01
20
00
.01
20
01
.01
20
02
.01
20
03
.01
20
04
.01
20
05
.01
20
06
.01
20
07
.01
20
08
.01
20
09
.01
20
10
.01
20
11
.01
20
12
.01
20
13
.01
15
BRAZIL IS A NET CREDITOR TO ABROAD(GROSS AND NET EXTERNAL DEBT AS A RATIO TO EXPORTS,
1970-2012)
-1,0
0,0
1,0
2,0
3,0
4,0
5,0
4°Tr
im.1
970
4°Tr
im.1
973
4°Tr
im.1
976
4°Tr
im.1
979
4°Tr
im.1
982
4°Tr
im.1
985
4°Tr
im.1
988
4°Tr
im.1
991
4°Tr
im.1
994
4°Tr
im.1
997
1°Tr
im.2
000
4°Tr
im.2
000
3°Tr
im.2
001
2°Tr
im.2
002
1°Tr
im.2
003
4°Tr
im.2
003
3°Tr
im.2
004
2°Tr
im.2
005
1°Tr
im.2
006
4°Tr
im.2
006
3°Tr
im.2
007
2°Tr
im.2
008
1°Tr
im.2
009
4°Tr
im.2
009
3°Tr
im.2
010
2°Tr
im.2
011
1°Tr
im.2
012
4°Tr
im.2
012
Dívida total líquida / exportações
Dívida externa total / exportações de bens e serviços
16
BRAZIL’S GDP VALUE AND RANK SOARED, 2000-2012
0
2
4
6
8
10
12
14
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Brazil's rank among biggest world economies
0
500
1000
1500
2000
2500
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Brazil: GDP in US$ bi
17
STRUCTURAL CHALLENGES
18
INFLATION-GROWTH TRADE-0FF IS UNFAVORABLE
19
TAX BURDEN IS HIGH(SELECTED COUNTRIES FROM OECD AND LATIN AMERICA)
0 10000 20000 30000 40000 50000 60000 70000 80000 900000
10
20
30
40
50
60
Tax Burden x GDP per capita: Selected Countries - 2010
GDP per capita(US$)
Tax
Bu
rden
(%
of
GD
P)
US
20
INVESTMENT RATE IS LOWArgentina 23.6
Bolivia 15.9 Brazil 18.7 Chile 22.5 Colombia 22.7
Ecuador 25.4 Mexico 25.2 Panama 24.3 Paraguay 18.3
Peru 22.8 Uruguay 19.6 Mean 21.7
21
SOCIAL SECURITY IS A BIG PROBLEM(OECD data for 2005)
4 6 8 10 12 14 16 18 20 22 24 26 28 30 320
2
4
6
8
10
12
14
16
18
20Soc.Sec. spending (%GDP) and dependency ratio
Dependency ratio (age 65+/age 14-65, %)
Brazil
Chile
Argentina
South Korea
Mexico
Poland
Japan
Italy
Canadá
US
Belgiumca
Gernany
Uruguay
Equador
% GDP
22
EDUCATIONAL LEVELS ARE POOR(PISA 2009 RANKINGS, SELECTED OECD+ COUNTRIES)
1 Shanghai, China 600
2 Singapore 562
3 Hong Kong, China 555
4 South Korea 546
5 Taiwan 543
6 Finland 541
7 Liechtenstein 536
8 Switzerland 534
9 Japan 529
10 Canada 527
31 United States 487
47 Uruguay 427
63 Brazil 386
74 Kyrgyzstan 331
Maths
23
INFRASTRUCTURE LAGS
24
ECONOMY IS CLOSED TO THE WORLD IMPORTS OVER GDP (%): BRAZIL, L.A. , BRICS, US (2011)
Argentina 20Brazil 13Chile 35Colombia 20Mexico 33Peru 25
China 27India 30Russia 22South Africa 29
US 18Average (except BR&US) 27
25
EXTERNAL BONANZA HELPED BUT IT CANNOT GO ON FOR EVER
Year Terms of Foreign Excess Dom.Trade Transfers SpendingEffect/GDP Effect/GDP over GDP
2005 0,0% -3,6% -3,6%
2006 0,7% -2,9% -2,2%
2007 0,9% -1,5% -0,6%
2008 1,7% -0,2% 1,5%
2009 1,8% 0,2% 2,0%
2010 3,4% 1,1% 4,4%
2011 4,4% 0,8% 5,2%
2012 3,4% 1,5% 4,9%
Decomposition of External Bonanza, 2005-10(in 2005 prices)
26
SOURCES FOR THE SLIDES• S5: Miriam Leitão, Saga Brasileira: A Longa Luta de um Povo por sua Moeda. Record, 2011: 260-261.• S6: Henrique Carvalho, “IPCA e IGP-M: Inflação Histórica no Brasil”, February 21, 2011. Avaliable at:
www.hcinvestimentos.com/2011/02/21/ipca-igpm-inflacao-historica/. • S7, S12, and S14: Thanks to Aurelio Bicalho from Banco Itaú BBA. • S8: Edmar Bacha and Regis Bonelli, “Accounting for the rise and fall of Brazil’s Post-WW-II GDP growth”, July 2012.
Available at: www.iepecdg.com.br. Updated in April 2013 by Regis Bonelli.• S10: Edmar Bacha, “Introdução”. In: E. Bacha, Belíndia 2.0: Fábulas e Ensaios sobre o País dos Contrastes. Civilização
Brasileira, 2012. Computed by Rodolfo Hoffmann from PNAD data.• S11: IPEA, “A decada inclusiva (2001-2011): desigualdade, pobreza e politicas de renda”, Comunicados do IPEA n. 153,
Sept., 25, 2012.• S13, S15, S16, and S20: Armando Castelar, ”Desempenho Recente e Perspectivas de Crescimento da Economia Brasileira”.
Presentation to the Seminar: Whither Latin America? Rio de Janeiro: Vargas Foundation, August 9-10, 2012. Updated in April 2013 by Julia Cavalcante Fontes.
• S18: Monica de Bolle, Há Esperança para o trade-off entre Crescimento e Inflação? Seminário de Conjuntura -- IEPE/Casa das Garças, 8 March 2013 (available at www.iepecdg.com.br).
• S19: Thanks to José Roberto Afonso and Kleber Castro.• S21: Paulo Tafner and Fabio Giambiagi, “Previdência social: uma agenda de reformas”. PPT. October 2010.• S22: http://en.wikipedia.org/wiki/Programme_for_International_Student_Assessment• S23: World Economic Forum, apud Financial Times.• S24: World Bank Data: http://data.worldbank.org/indicator/NE.IMP.GNFS.ZS.
• S25: Edmar Bacha, “Bonança externa e desindustrialização: uma análise do período 2005-2011”. In: E. Bacha and M. de Bolle (eds.), O Futuro da Indústria no Brasil: Desindustrialização em Debate. Civilização Brasileira, 2013.