at the São Paulo Conference
on June 9, 2009
His Excellency the Vice Minister of Development, Industry and Foreign Trade of Brazil Ivan Ramalho, United States Ambassador to Brazil Clifford Sobel, Elcio Anibal de Lucca, Chairman of the Board of Movimento Brasil Competitivo, panelists, members of the Council of the Americas and Americas Society, special guests, friends Gostaria de Extender-Lhes Boas-Vindas ….welcome to the Sixth Annual Brazil Latin Americas Cities Program. It is an honor to be here this morning. And as always a pleasure to be back in Brazil.
We are so pleased to once again have the opportunity to partner on this conference with our friends from Movimento Brasil Competitivo. I want to especially thank Elcio and his team from MBC for all their hard work. I also want to thank my friend and board member Marvin Odum for traveling to Brazil to be with us. Today, I want to extend an apology from Mack McLarty who at the last minute could not join us due to his involvement in the Penske/Saturn automotive deal and a very special thanks to my friend Eleazar de Carvalho for all his suggestions and support. Finally but not least thank you to my team….great job.
A very important thank you to our sponsors, regional sponsors JPM, Microsoft and Corporacion Andina de Fomento and our Brazil sponsors; Banco Itau, HBO Latin America, Telefonica and Shell. Thank you so much. Molta obrigada.
Thank you also to the Confederacion Nacional de Industria, Camara Americana de Comercio (AmerCham), CEBRI (Brazilian Venter for International Relations) and to FIESP (Industry Federation of the State of Sp) for your cooperation on this event.
2009 has already been an extraordinary year and we still have more than 6 months to go.
In the United States, a new president who brings with him optimism and hope not only in the United States but around the world. And who after 130 very challenging days remains extremely popular over. And his wife even more popular. A global economic crisis of a magnitude which we have not seen probably since The Great Depression. However worthy of note, a crisis which was not initiated in Brazil, Latin America or any other emerging market but rather has its roots in my country, The United States.
As a result of the meltdown of global confidence we have seen over the last several months huge market volatility with dramatic global market declines and a rebound of equal force in key emerging markets particularly brazil reflecting the markets belief that Brazil and certain other key emerging economies will outperform developed countries in terms of real economic growth when the downturn finally ends.
So now let me focus a bit on The U.S. The economy which is beginning to feel better and consensus seems to indicate that the economy has avoided free fall an early concern. But we still need to see if we are at the end of the recession and if some growth will be restored before year end or if it will be 2010. Many of the recent statistics are not as bad as the market had expected—thus the swift turn around of the DOW (which many say may be out in front of the real economic recovery). And in fact only approximately 4 percent of the stimulus package has yet to be spent a good sign if future stimulus is required. However unemployment is still very high for The U.S. –9.4 percent and will probably not get better for some time. Also President Obama’s domestic agenda not to speak of the international agenda is enormous.
Top of the agenda of course has been and will be the economy. Not only short term stabilization of the economy including the financial system , the automotive sector and more but a return to long term sustainable growth with low inflation. And to accomplish this the fiscal deficit must be reduced—another very challenging area. Healthcare reform a major campaign promise is a part of that reduction but will also add to the deficit if funding is not contemplated in its conception. Tax increases both state and federal will also be on the table it is worth noting that there are only 4 states in The U.S. which do not have a deficit…I have focused on some of the economic issues of course there is energy, and climate change , immigration, confirmation of a supreme court nominee , a few wars etc. Just to give you a flavor of the magnitude and complexity of the agenda.
In short President Obama is attempting to tackle every conceivable issue facing The U.S., both domestic and international, all at the same time. This is historic and has never been tried before even during the time of FDR, The Great Depression and New Deal. Congress, which is controlled by the President’s party, is sympathetic to the President’s agenda but given the magnitude and speed of change can not be assumed to support every issue. So this adds up to interesting times ahead—and only time will tell how successful each initiative will be.
However, the population is rooting for success because if the President is successful it means that everyone will be better off.
As you might note, I have not mentioned trade….critical to global growth. Global trade in 2009 has actually fallen 9 percent. A major concern remains the potential of protectionism particularly if growth and employment in The U.S. and world does not improve.
Brazil to date has played a critical role in the Doha Round and has been a major proponent of its completion.
Continued leadership on this front becomes even more important as we go forward in today’s world.
Brazil‘s emerging global leadership position has also been highlighted during this crisis. As a member of the Gg-20, with President Lula’s early meeting with President Obama and Brazil’s participation in making the summit a success. As energy and the environment has come more to the policy forefront Brazil’s energy strategy of more than 20 years which has come to fruition and made the country the leader in alternative energy and flex fuel as well as the now has the potential to be an energy super power has been globally recognized as the standard. And of course its hemispheric leadership position which will critical in the years to come.
So it is with this backdrop that I again thank you for joining us.
It is truly a pleasure to be in Brazil.