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LatAm in Focus: Brazil's New and Old Hurdles in 2020

Paulo Guedes and Jair Bolsonaro (AP)

January 30, 2020

"In Brazil, poverty and extreme poverty in particular have risen dramatically in the last two years. That is a huge concern." — @bollemdb talks with @luisaleme about simmering frustrations in Brazil in 2020 in this week's #LatAmFocus episode
Despite passing pension reform last year, Brazil's economy still needs mending—and the Bolsonaro government is missing an opportunity to cut inefficient spending, says @bollemdb. Hear her conversation with @luisaleme in this week's #LatAmFocus episode.

Brazil's new year started with calmer streets than what we've seen recently in other Latin American countries; the gatherings you see are not protests but Carnaval parties. But could the turmoil hit Brazil in 2020?

Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, thinks it's possible. With few policy fixes on the horizon to alleviate inequality or improve social mobility—two issues sparking regional protests—people could get frustrated. "Even in those places that have experienced protests, poverty has remained either stagnant or has continued to go down a little bit. That's the case in Chile," she tells AS/COA Online's Luisa Leme. "But in Brazil, poverty and extreme poverty in particular have risen dramatically in the last two years. That is a huge concern."

One year into his government, headlines about President Jair Bolsonaro have been dominated by controversial videos surfacing, concerns over freedom of expression, and news of warmer relations with Washington.

So where does economic policy stand amid the controversy? Despite the Brazilian Congress passing pension reform last year, lingering problems need to be addressed to mend the country's economy. With Economy Minister Paulo Guedes focusing his concerns on fiscal policies, such as tax reform, that can be hard to pass ahead of important municipal elections, de Bolle points out the government is missing an opportunity to cut inefficient spending. "What are the spending cuts that you can do that won't affect social programs, pensions, certain benefits that people need to survive, and to be able to consume?" she says. De Bolle says the answers are already in a 2017 World Bank report reviewing the countries expenditures. "The work has been done already."

The search for economic creativity is not Brazil's only challenge. The country faces criticisms for Amazon deforestation, which de Bolle says is hurting EU-Mercosur trade negotiations, Brazil's bid to join the OECD, and investors' stance toward the country. "The whole thinking behind developing and exploring the Amazon, the way the Bolsonaro administration speaks about this issue, is very nationalistic," says de Bolle, who is writing a book on how nationalistic governments manage their economies.



This episode was produced by Luisa Leme. The music in this podcast was performed at Americas Society in New York. Learn more about upcoming concerts at musicoftheamericas.org.