Brazil Enters a Recession and Officials are Divided Over How to Resolve It

by Silvio Ramirez

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Brazil is South America’s largest economy, the seventh largest economy in the world, and was considered, for many years, as a favorite for investors. For the past decade, Brazil has benefited from a global commodities boom. During President Luiz Inacio Lula da Silva’s two terms in office, Brazil enjoyed rapid economic growth by capitalizing off of soaring commodities prices and a booming China willing to purchase iron ore, oil, and soya beans from Brazil. Brazil’s commodities boosted tax revenue and the Lula administration was able to create a government cash-transfer program that helped 30 million Brazilians escape poverty. As a result, consumer spending expanded. More recently, however, Brazil’s economy has started to tank due to the commodities bust and China’s sluggishly performing economy. Making matters worse, Brazilian officials are indecisive on what actions to take to enhance economic performance.

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