A Long Climb Back Up

As these lines are written the government of Brazil appears to be taking gradual but positive steps towards the passing of critical legislation at Congress. After all, limiting member State spending will be crucial for restoration of fiscal equilibrium, one of a number of decisive measures to help rescuing the country’s credibility and its attractiveness to investors.

As political leaders negotiate the enactment of remedies unlikely to be too popular, yet nonetheless essential at this stage, experts seem all to point to infrastructure as the leading opportunity for investments. Quoted by Bruna Lencioni of the AméricaEconomia magazine, Eurasia Brasil’s Christopher Gardner anticipates up to US$ 269 billion in infrastructural projects open to PPPs for oil & gas, electricity, telecommunications, transportation, roads & railroads, ports & airports, sanitation, urban mobility and others.

For Zeina Latif of XP Investimentos the backlog is such that Brazil is currently spending less than 2% of its GDP in the maintenance of existing infrastructure alone – against an estimated minimum required of 3% and of the 5% being employed by neighbors Chile and Colombia. The consequent structural deterioration only adds up to the huge demand for all kinds of works in several domains.

Latif maintains that once economic order is reinstated people are bound to regain confidence in the system and at that point raising consumption will become another upward driving factor. She goes on to say that, should the government succeed in its correctional moves, by 2018 the scenario will push the next president in the direction of a more liberal agenda. “The potential is enormous!”, she concludes.

Trouble is far from over though. Unemployment remains excessive and the wheel of change has barely started moving. It will take time for the chain effect to salvage ordinary Brazilians from the deepest of recessions. Until it happens such words from specialists remain eloquent and useful to the cunning listener.