Brazil Fosters Economic Growth in Latin America

Bolsonaro ended the privileges of the political class.

1,357
Under Jair Bolsonaro’s administration, Brazil’s economy prospered so much that it boosted the entire region. (EFE)

Spanish – On Monday, January 20, it was officially revealed that the Latin American economy would grow by 1.6% in 2020 and 2.3% in 2021, thanks to Brazil’s success with Jair Bolsonaro’s presidency. Although the economies of Chile and Mexico have worsened, the economy of the region as a whole is still favorable.

This was stated in the report on “Global Economic Prospects” presented at the World Economic Forum in Davos, Switzerland.

Besides the growth in the mining sector, Brazil’s economy was strengthened the most by ending the privileges of the political class. Each public official was earning the same as 20 workers in the private sector. Until the pension reform was approved, Brazil spent 53% of the state budget on public employee pensions.

Bolsonaro ended the privileges of the political class

After ending the inequality between the public sector and the working class, Brazilians will save one trillion reals (250 billion USD) in 10 years, which will allow investment in infrastructure and decrease the brutal Brazilian tax burden.

Both the profit and the savings for Brazilians increased as the Bolsonaro administration exceeded its goal in record time. In the first nine months of 2019, Brazil privatized more public companies than it had planned for an entire year. This put an end to the state monopoly of several industries and encouraged job creation in the private sector.

The initial goal was 20 billion USD, a product of the privatizations in the first year of the administration. But in the first week of October, the government announced that it had exceeded the target by 3.5 billion USD. The Special Secretariat for Privatization, Divestment, and Markets of the Ministry of Economy released this information.

According to the data, privatizations and disinvestments amounted to 19 billion USD, concessions to 1.4 billion USD, and sales of natural assets to 2.9 billion USD.

According to the report, in the last ten years, Brazil has spent 190 billion reals (46 billion USD) with subsidies and contributions in state property.

Overall, not only were there fewer subsidies, but a surplus was left over, thanks to the privatization process.

“Less state, less in the hands of politicians, more efficiency, and spending public money in truly essential areas,” Bolsonaro wrote on Twitter, sharing a TV Brazil report on the subject. “We will go further,” Bolsonaro said, commenting on the success of the privatization and concessions program in 2019.

The IMF global GDP forecast drops to 3.3% in 2020 for emerging countries

Chile has recently witnessed political and economic instability. Mexico has not experienced growth because of its government that shuns investment and hs monopolized industries that can boost the economy and facilitate savings for Mexicans. However, thanks to the development in Brazil, the economy of the Spanish-speaking-Americas as a whole has improved.

Nevertheless, the IMF has slightly lowered its forecast for global economic growth to 3.3% in 2020 and 3.4% in 2021, due to possible adverse “shocks” in emerging markets, which are the cause of the malaise.

Chile was the most prosperous country in the region, with the lowest poverty (8.36%), the highest minimum wage, and the most significant possibility of social advancement. But the protests in October showed that there is a desire not to live better, but to secure equality, even if it means living in poverty. To achieve this, the protesters won a plebiscite that could change the constitution to one that upholds “social rights.”

So far, 165 000 people have been rendered unemployed as a result of looting, strikes, and the state of emergency.

Mexico’s economic landscape is bleak. The economy has not grown since Andrés Manuel López Obrador (AMLO) assumed power in December 2018, and the gross domestic product (GDP) is in the red: it registered a contraction of 0.4% per annum in the third quarter of 2019, according to the National Institute of Statistics and Geography (Inegi).

Job creation in Mexico fell by 39% from 2018 to 2019. Unemployment is a critical macroeconomic indicator of an imminent recession, and warnings have already been issued.

Amid concerns about the economies of Chile and Mexico, the IMF highlighted the end of the trade conflict between China and the United States, which was consolidated despite U.S. tension with Iran, as positive international news.

China, as the largest importer of oil in the world, is pushing for a peaceful solution. In the face of the food crisis, it is undergoing, importing from the US agricultural zone will be mutually beneficial.

Although the IMF predicts that US growth will fall slightly this year and the next, the forecasts are encouraging for Brazil and the region; meanwhile, Bolsonaro promises to continue to move forward with privatizations and thus shrink the state while generating jobs in the private sector, which is the productive one.

He marked his first year in office with more than 1.1 million jobs generated, and there are still three more years. Brazil also now has Uruguay as an ally on the southern border.

Subscribe free to our daily newsletter
Sign up here to get the latest news, updates and special reports delivered directly to your inbox.
You can unsubscribe at any time