Brazil’s improving fortunes are partly the result of things outside the president’s control. But several policies from Lula’s government have buoyed investors’ spirits, too
at risk. China has lifted pandemic restrictions, driving up demand for foodstuffs. Both factors have made Brazilian grains more in demand. Soyabean exports alone could account for a fifth of economic growth this year. This is increasing the country’s trade surplus, which is already hefty .
It also helps that Brazil’s central bank is independent. Lula has frequently thrown barbs at its president, Roberto Campos Neto. Lula blames Mr Neto for dampening growth by maintaining an interest rate of 13.75%, among the highest in the world. But the bank’s policies appear to have paid off. Annual inflation fell from 12% in April last year to 3.2% today . The bank is expected to lower rates this week.
Investors are also looking at Brazil’s potential to produce clean energy, and Lula’s ambitions to make the country a green power. This month the government is set to introduce a package of around 100 environmental initiatives, including a law to create a regulated market in carbon emissions and one to boost green industries. The government reckons the package will require hundreds of billions of dollars of mostly private investment.
The more other sectors get special treatment, the higher the overall standard rate will be, says Eduardo Fleury, a consultant who advised the government on the reform. The service sector, which will see its tax burden rise the most, is pushing back hardest. “We need a tax evolution, not a tax revolution,” says Guilherme Mercês of the National Confederation of Commerce, Services and Tourism.It is also not certain that the government will get its finances in order.
Belgique Dernières Nouvelles, Belgique Actualités
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