Crowding out: government money still discourages Brazil’s private investors

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Along with the other “Bric” nations —Russia, India and China—Brazil is showing signs that its post-2008 economic rebound is slowing down. This raises questions about its ability to generate persistently strong growth. Investors should take note. Complete data for 2011 showed that the economy expanded by around 2.7 per cent in real terms, a number considerably weaker than the previous year’s 7.5 per cent and not especially different from the growth rates typically enjoyed by many developed economies, especially before the crisis. This evidence has led observers to wonder whether Brazil has reached the limits of its popular status as a Bric, and that we should no longer assume overarching growth rates. A more sober picture has developed, reflecting Brazil’s vulnerability to the so-called Dutch disease—where nations rich in natural resources suffer a corresponding decline in their manufacturing sector. Certainly, last