B is for Brazil

About this programme by Peter Day

Whatever the headline writers say, this jolting global recession is not over yet, but one or two things seem to be emerging from the dust.

In particular, there is lots of talk about the way that Asian countries seem to have avoided the worst of the recession, China in particular. On the face of it that is surprising: China’s huge export surplus must have been badly hit by the collapse in global demand.

This was, after all, one of the contributory factors to the credit crunch, and if the world was out of balance before the bubble burst, then some kind of rebalancing of world trade ought to be one of the consequences.

If China lets its currency rise to reflect its trade supremacy, then that might happen.

But China is only one of those four countries famously initialled BRICs. These nations that many people now expect to leap to the top of the world’s economic top table over the next several decades are Brazil Russia India and China.

In sheer terms of population, and recent economic growth, it’s difficult to argue that India and China won’t see huge relative advances in their economic power.

Cronies

But I still wonder about the other two. Russia gets onto the list because of its huge reserves of energy that will give it great clout in the future world, and its potential for development, because it’s been held back for so long by politics.

But it is still easy to imagine that it is now going to be similarly undermined by its crudely underdeveloped civil society, the new concentration of economic power in the hands of the oligarchs and cronies.

Brazil gets on the BRICs list because it is a huge supplier of stuff to other BRICs countries ... iron ore, sugar, coffee and soya beans in particular. And it has its own population of almost 200-million people, and that huge interior land mass which may hold out vast agricultural prospects or not, depending on your ecological viewpoint.

(Brazilian experts and ministers insist that the virgin Amazon forest is not under threat from agricultural developments which are concentrated on grasslands outside the Amazon region. But who knows what are the long-term consequences of turning grassland of savannah into annual crops?)

Essentially Brazil is exporting its water to drier countries, in the form of crops, and it is not clear how sustainable that is going to be.

There is no arguing with Brazil’s BRICs potential... it has already got (by some measurements) the sixth largest economy in the world, and some interesting international companies such as Embraer, the fourth largest global plane maker.

But people have been naming Brazil as the country of the future for more than 100 years, and something always seems to hold it back: endemic poverty, or social or political trouble, or a great inflationary outburst (which seems now be licked).

Olympic

In truth there is no way to determine whether or not the BRICs thesis really applies to Brazil, not at the moment. The picture is muddled by the palpable sense of excitement in the air.

Despite the recession, the Brazilian economy still showing healthy growth. Vast oil reserves have just been discovered in the deep Atlantic off the Brazilian coastline (even as the country pins high hopes on its production of ethanol fuel from sugar cane, a long-standing eccentricity that now seems rather visionary in the light of global sustainability concerns).

And now Rio de Janeiro has won the right to stage the 2016 Olympic Games; that will surely unleash an injection of energy which economists call the Olympic Effect… not just a curiosity, but a measureable impulse to economic growth. Does that have to power to transform the poverty in the drug-ridden slums of Rio?

South America is an enthralling continent and Brazil is the leader of the pack. Our world, the one we have grown up in, is changing shape. And we still have to learn to live with the consequences.

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