Brazil’s economy has turned tepid. Last year growth was one perccent, the lowest rate of any major emerging economy. Mexico is now Latin America’s growth darling. Meanwhile Sao Paulo’s jetsetters are squirreling away their savings in Miami real estate, a trend that perhaps has less to do with the perception that U.S. real estate has turned the corner than it does with the need to spend the overvalued real before the currency gives way to macroeconomic fundamentals.
Meanwhile Petrobras, the state-owned company at the heart of much of the fervor over Brazil, spins its valve wheels. It is still recovering large sums of oil and gas, but the offshore windfall discovered in 2007 has yet to make the country into a sort of democratic Saudi Arabia. Granted, technical challenges are the major reason for the slow pace of oil recovery from the pre-sal flats. But the deep waters also obscure the fact that the Brazilian government hasn’t resolved how the revenue will be divvied up — some will be reinvested in Petrobras, some to education programs, and another dollop will go to poverty eradication. And a combination of fines against Western oil companies like Chevron for infractions related to oil spills, and dry wells, may be dampening investor enthusiasm.
Gone, too, are all remnants of high-level Brazilian diplomacy. Unlike Turkey, which has made good for cozying up to Iran by, among other things, reconciling with Israel, Brazil has yet to expiate for its foreign policy overreach of year’s past. As a result, the tone of Brazilian foreign policy has gone from a soft — but nonetheless constructive — anti-Americanism, to aimlessness.
Of course, these observations relate to headline trends. But they are fair. After all, Brazil’s growth from 2003-2010 was based less on fundamentals than wild enthusiasm that the country sat ready to usher in a new world order.
