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Relaunching economic (and diplomatic) perspectives for Brazil

  • Rome
  • 8 February 2024

        In assessing Brazil’s future prospects, one fact in particular could be summarized as follows: The country’s institutional-political system is solid (an aspect that makes it unique among emerging economies at this stage), despite a political-social polarization that remains marked even as the economy shows signs of dynamism, notwithstanding the presence of persisting imbalances and weak points.

        The Brazilian economy is highly diversified on the industrial level, in terms of both manufacturing and services, thanks not least to the ample availability of natural resources and raw materials. “Green” industries are particularly developed, which places the country at an advantage with regard to new businesses and some advanced technologies. To complete this positive picture, there is an excellent distribution of specialized skills at both management and labor levels – something much less true of the United States and parts of Europe as well. On the other hand, some well-known problems persist, along with a series of specific weaknesses such as high interest rates and infrastructure inadequate to meet the needs of a country so vast; in addition, a highly complex legislative framework (regarding both taxes and the job market) creates barriers to doing business.

        In any case, although not exceptional, Brazil’s economic performance is good, and prospects for balanced growth are promising. Since 2008 the country has shown a remarkable and sometimes unexpected ability to pivot rapidly from the GDP slumps (including three recessions) that have been due partly to international factors and partly to domestic dynamics.

        The Lula government’s economic approach has received positive assessments from ratings agencies and major international institutions, which has created an environment favorable to attracting capital and large-scale industry. 

        Investments already underway, and those planned, are focused especially on strategic sectors such as infrastructure, healthcare, environmental sustainability and defense. Growing interest on the part of international investors is confirmation of the good direction the country is going in; the economy appears vigorous and adaptable compared with a continuously shifting global value chain scenario, and well-diversified in terms of exports. Brazil’s strength as an agricultural power also assumes importance in light of the major food chain problems that have emerged in recent years. 

        Many of Brazil’s domestic objectives, central also to its G20 presidency agenda this year, places strong emphasis on combatting inequality.

        Such developments are part of an increasingly rapid and unruly global slide toward multipolarity, a phenomenon to which Brazil is contributing and that should be better governed in the future in order to contain its most negative and conflictual aspects. The BRICS’ current prevailing stance (mainly China-driven) is a concern, but it could be modified according to a more complementary and less antagonistic vision of the West and the OECD/G7 countries. In that sense, Brazil can play a constructive role in tipping the delicate diplomatic balance. 

        Looking at Italy/Brazil bilateral relations, the official high-level visits already scheduled for this year bear witness to a solidity that will only be strengthened by the celebrations marking 150 years of Italian immigration in that country.

        Current trade relations are therefore founded on intense historic and cultural bonds, as well as on economic complementarity. Proof of this lies in the strong presence of Italian-run businesses in Brazil in various sectors, whose margins of growth are substantial – especially if the government’s economic policies continue to be underpinned by pragmatism and receptivity to the rest of the world. From Italy’s perspective, apart from a market and major trade partner, Brazil is ideal for cultivating relations with other Latin American nations.

        From an intergovernmental standpoint, some forms of coordination between the G7 and G20 could be considered with a view to strengthening the role of both countries in encouraging multilateral cooperation in various forums.