Brazil's Rise to the Top
An emerging economic power -- through the eyes of a visitor.
Oh, to be Brazilian at this moment in time, I thought as I sighed longingly.
I left behind the internal malaise of the United States to find its antithesis in Brazil: A friendly, jovial people; an emerging middle class; a country that's a net exporter instead of importer; a strengthening currency; widespread development and investment in infrastructure.
Somewhat like Americans felt in the years after World War II -- that boundless optimism that comes with facing an open range of possibilities, of drawing on blank canvass in a nation's collective history -- so, too, do Brazilians sense the significance of this moment in their history, an aspirant on the world stage following a monumental global upheaval. The feeling is palpable there.
To put it simply, this is Brazil's time in the sun.
This would have been hard to imagine only five years ago. Inflation reached above 17% in 2003 and there was an expectation that Brazil would default on its foreign debt. But the new government of Luiz Inácio Lula da Silva (known as Lula) helped bring down inflation and spark a turnaround in the country.
Since then, the stock market's value has octupled (that's eight times) in dollar terms as gross domestic product has tripled. Inflation is now around 4.5%. The Brazilian real is the best performer among the world's 16 most-traded currencies this year, posting a gain of 23% against the dollar. It's strengthened to almost 1.86 per dollar from 3.5 in January 2003.
I went to Brazil to visit a friend who lives in Sao Paolo and works for Citibank. He was an exchange student and my roommate at Brown University in Rhode Island in the spring of 2004. Then, his Brazilian real carried little weight; he was, for the most part, unable to buy much. Five years later, in a role reversal, I found my greenback to be worth far less in Brazil than before. Rio de Janeiro and Sao Paolo -- now firmly global destinations -- are nearly as expensive as New York City, itself an outlier in America.
I joked with my friend and asked why he hadn't suggested I buy Brazilian reais in 2004. "The country was falling apart then," he said. "It was a mess."
Much has changed since then. In the many cases where the United States has stumbled making one mistake after another, Brazil has taken the opposite path. A net exporter, Brazil has diversified export markets and products. It took advantage of the boom years to increase savings. It has a well-regulated financial system that prevented it from being corrupted by toxic assets. Some of its companies -- like Petrobras (PBR) and Vale (VALE) -- have become the largest in the Americas. And the country has a track record of using alternative energy and protecting its environment.
For these reasons, Brazil is already emerging from its brief recession, and clearly leading a South American recovery, according to a recent JPMorgan analysis. Next year, Brazil's economy is expected to expand 2.5%, according the International Monetary Fund.
In Rio de Janeiro, known as "The Marvelous City," I saw few signs of a slowdown -- only the lively markings of a dense, bustling city of more than 6 million. I saw few storefront vacancies. Across many different neighborhoods, beaches and restaurants and bars and samba clubs overflowed with people, some emptying into the streets in the early hours of morning. The residents of Rio (known as Cariocas) are diverse, friendly, and lack pretense; they seem united by a common vigor for life.
The whole city felt pre-modern in its bliss. I thought, "Didn't they know the world was still in crisis?" But then, for the first time in a half-century, it seems that other countries can not only survive, but also thrive, apart from the United States. Brazil may be the ultimate test case. There's an emerging middle class in Rio and Sao Paolo, young and newly wealthy. They're happy consumers and enjoying the benefits of a strong currency. Unlike my generation in America, they aren't beset with the angst we feel.
Despite its economic boom, Brazil still struggles with problems like extreme poverty, inequality, and an illiteracy rate over 10%. On a guided tour in Rio, I visited a large favela, or shantytown, perched on a mountainside above the beach and next to an affluent neighborhood. There, garbage piled up and motorbikes whizzed past and ramshackle homes were stacked up the mountainside like Legos. In Sao Paolo -- the business center of the country -- some parts of the city are fitting for a sequel to Blade Runner. Its smog, hours-long daily traffic jams, and sprawling concrete high-rises make Los Angeles seem tame.
Brazil's popular president, Lula, has committed to tackling these social challenges. A recent oil discovery off the coast may funnel money to education and health care. People I spoke to in Rio said the government has finally decided to develop infrastructure in the favelas.
Much of this will be on the agenda before the World Cup returns to Brazil in 2014. Rio is also on the short list to host the Olympics in 2016.
Overall, these problems are like the growing pains of an adolescent youth. At the end of my trip, as I returned to the United States and the dissent and turmoil that's impossible to ignore here, I couldn't help but long for the anticipation and excitement I'd seen of a country and its people growing nicely into adulthood.
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