Which resources are important for Brazilian exports
Economic strength: Homemade problems are holding back Brazil's growth
To stick with football: With a goal difference of 5: 2, Brazil's economy has been losing the battle for sufficient growth since 2011. According to the UN Economic Commission for Latin America, a five percent increase would be necessary to overcome the structural problems. However, only two percent was achieved on average. For 2014 there is a threat of a further decrease to one percent.
What are the reasons for the weakness of the Brazilian economy? It can't be because of the potential. With its vast agricultural, mining and energy resources, the South American giant occupies a global leadership position. In addition, Brazil has developed industry, a growing domestic market, an expanding export sector, and foreign exchange reserves of $ 375 billion.
The financial sector and agriculture have benefited from deregulation. One of the country's pluses is its political stability. But why doesn't the economy get off the ground even though the country is immeasurably rich?
Brazil scores too many own goals. Almost all problems are homemade. The government interventions threaten the financial health of the energy sector through low fuel and electricity tariffs.
Where high-quality foreign products can be imported cheaply, the government is sealing off the market in favor of domestic products that can only partially compete. Monetary and fiscal policy fluctuates between promoting economic growth and containing inflation, which is currently 6.5 percent.
However, the main problem is less what the government is doing than what it is not doing. Foreign direct investment is subject to few legal restrictions. In practice, however, there are too many bureaucratic hurdles to overcome. Reducing the high tax burden and simplifying the complicated tax system has long been discussed in vain.
For many years, everyone in charge has known that the entire transport infrastructure (ports, roads, railways, airports) is a serious bottleneck for imports and exports. Nevertheless, the expansion is not progressing fast enough. The state would have to invest at least three times as much to get better. The lubricant manufacturer Stefan Fuchs said: “It is a difficult country. Because it is so difficult, Brazil stands in its own way. ”(“ Die Welt ”, June 22, 2014).
Productivity leaves a lot to be desired
The productivity of almost all areas of the economy leaves a lot to be desired. This is not only due to the complicated framework conditions for the private sector and the infrastructure deficits. The ineffective education system and the complicated and employee-friendly labor law impair innovation.
The Central Association of the German Electrical Industry, ZVEI, calculated in July 2014 that the total factor productivity, which takes into account not only work but also the capital stock invested, is no higher in Brazil today than it was in 1960. Despite strong wage increases, consumers are holding back. This is not least due to the high level of household debt. Domestic sales have plummeted. The Brazilian automobile manufacturers association Anfavea reports a decline in sales figures of 16.8 percent for the first half of 2014.
The German vehicle manufacturers in the country are reacting to this situation with production cutbacks. The mood among Brazilian entrepreneurs hit a new low. Contrary to all forecasts, the soccer World Cup did not stimulate the economy.
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