Two men holding guns in the LAAD Defence and Security Fair 2015, Rio de Janeiro. Demotix/Marcelo Fonseca. All rights reserved.
“Brazil is the country of the future and always will be.” So went the clichéd adage that for decades underscored Brazil’s perennially unfulfilled potential. But then Latin America’s sleepy giant finally seemed to awake from its slumber. Coupling progressive social policies with economic growth, Brazil looked set to claim its place in the sun during the 2000s. That moment, however, is long gone. And now it’s the country’s the future that is lying in jeopardy.
It is no secret that the economy is performing poorly: In April, the IMF lowered its 2015 growth forecast from 0.3% to 1% contraction. According to the Fund, investments have been “sluggish” and despite the fact that consumption has been just moderate, the Brazilian Central Bank (BCB) is fiercely increasing interest rates in order to fight inflation. The current base interest rate of the BCB is 12.75%. At the same time, investment in Petrobrás, the semi-public Brazilian oil corporation, has dropped significantly due to a major corruption scandal. In late April, after Petrobrás published its first accounting report since investigations began, Moody’s justifiably downgraded the company’s rating to Ba2.
