There was a time when Brazil was the toast of the global economy. As indicated in a recent article authored by Simon Romero, Brazil was hailed as a model, with global leaders applauding the nation’s robust growth, its shrinking inequality and its thriving democracy. The Brazilian economy expanded by seven point six percent in two thousand and ten, the fastest rate in more than two decades.
Today, Latin America’s largest economy and the world’s seventh largest is in crisis. Brazil’s economy expanded just zero point one percent last year. The economy is expected to shrink nearly three percent this year and for twenty sixteen, economists are forecasting no growth at all or yet another recession. Standard and Poor’s recently downgraded Brazil’s credit rating to junk status, igniting a broad sell off of Brazilian financial assets.
Brazil’s borrowing costs will rise as a result even as the nation’s government works to rein in spending. Many economists contend that Brazil’s troubles have their origins in a series of policy shifts, including the imposition of price controls on gasoline and electricity, which created enormous losses at public energy companies.
