President Rousseff faced with Brazil’s slowing economy

World Today

It has been a tough year economically for Brazil. Investor confidence is down, inflation has crept up, and government finances are slipping into deficit. While Dilma Rousseff may have been reelected as the country’s president, she’s far from smooth sailing into the public’s favor. 

Rousseff’s successful campaign stressed her government’s record in lifting millions of Brazilians out of poverty. Even so, the state of the economy is a major challenge as she prepares to begin a second term. Brazil seemed the darling of the developing world not long ago. In 2010, it achieved 7 percent growth while many major economies were struggling with recession. This may not be the case today.

CCTV America’s Stephen Gibbs had this report from Manaus, Brazil.

President Rousseff faces Brazil\'s slowing economy

It has been a tough year economically for Brazil. Investor confidence is down, inflation has crept up and government finances are slipping into deficit. While Dilma Rousseff may have been reelected as the country's president, she's far from smooth sailing into the public's favor. CCTV America's Stephen Gibbs had this report from Manaus, Brazil.

“This year, probably the end of the year, we are going to know that the performance of the economy this year was zero percent growth rate, probably next year is going to be roughly one percent,” said Samuel Pessoa, a researcher for the Brazilian Institute of Economics. “It’s an improvement but still, 1 percent for an economy like Brazil is a very bad performance.”

The government’s critics have said that a failure to invest sufficiently in infrastructure and an overly protectionist economic policy have made matters a lot worse. Brazil currently ranks 120 in the world bank’s global ranking of ‘ease of doing business.’

One troubling figure is a marked decline in the government’s finances. This factors in how much the government receives versus how much it spends. The country is on course to end 2014 with its first primary budget deficit in two decades. This heightens the risk of a downgrade by the world’s credit agencies.

“You need a very strong fiscal situation to keep the debt under control. Otherwise, it starts to grow like a snowball,” Pessoa said.

Inflation, meanwhile, is hovering just above the government’s target ceiling of six and a half percent. It’s not a huge figure, but in a country with a relatively recent history of hyperinflation, rising prices are a sensitive matter.

The rate of unemployment, which is at an historic low, is a standout piece of economic good news. However, investment and slow growth mean even this is being threatened.

One thing President Rousseff has announced she will go after the G-20 summit is appoint a new finance minister. The position is currently vacant.