What’s gone wrong with Brazil’s economy?


When Brazil’s far-right president Jair Bolsonaro took the power on 1 January, 2019 many people of the country were concerned that the divisive politician would not be able to bring the country together. But the business people of the country was unanimous in praising Mr. Bolsonaro’s rise to power. Mr Bolsonaro boasted during the election that he did not understand anything about economics.

After taking power he delegated all the decisions about economy and business on the subject to businessman Paulo Guedes and he became a “super-minister” of the economy. It was a challenge for the new government to rescue the economy of Brazil from the brink of another recession. But it’s a matter of grief that the economy of Brazil is still at the same level it was back in 2014.Markets were expected at the prospects of liberal reforms of economic policy to come.

But soon expectations started to fall apart. A series of government failures  such as political conflicts inside the administration, a clumsy attempt at state intervention in Brazil’s fuel policy and the lack of leadership in Congress – hampered growth expectations.


Most analysts have halved their growth expectations for Brazil and now believe significant growth will not start until 2020.

Now find some of the key figures that suggest Brazil’s economy is not moving forward

1. There’s no economic recovery in sight

In the previous decade, Brazil was admired (along with Russia, India, China and South Africa) as one of the Brics powers – emerging economies with superfast rates of economic growth that would surpass developed economies by 2050. But the economic performance of this decade suggests that Brazil does not belong in that league anymore.

During two-year recession in 2015 and 2016 the economic growth of the country was about 7% negative. After that economic recovery has been sluggish. In 2017 and 2018 yearly growth was only 1.1%. And now in 2019 economic growth is not very different from that seen in the past two years. And expectations are dropping every week.

2. The unemployment problem isn’t being solved

Brazilian workers are also suffering by this low growth rate. The number of unemployed people has increased. In 2012 the number was 7.6 million and now the number becomes 13.4 million this year

The official unemployment survey shows that 28.3 million people are under-utilized – which means they are either not working or working less than they could.

Since the beginning of Brazil’s recession four years ago, prices have gone up by 25%

3. The currency and stock market have dashed post-election hopes

During the election time, the Brazil’s currency rallied strongly as it became clear that Mr Bolsonaro would win the election. It was a clear positive sign for foreign investors.

But after almost five months, prospects of this sector is also now becoming fade.

Both the stock exchange and the currency – Indicator of the growth of the real economy – are remaining at the same level they were at the beginning of this year.

Brazil’s stock exchange hit an all-time high in March this year, but has returned to that disappointing point where it was before.

4. Still mired in debt

The main reasons of recent recession of Brazil – is that the country started spending too much money around 2013, over spending government of Dilma Rousseff.

Since then, one of the main thermometers of Brazil’s economy has been the fiscal deficit – the amount of money spent beyond the country’s revenues.

Since her downfall, all efforts of the government have gone into lowering this fiscal deficit.