lion Brazilians and cut poverty by one-quarter.
higher standard of living will pay dividends to
all in the form of greater economic mobility,
as poor families manage to invest more in
their own health and education.
port of macroeconomic fundamentals, com-
bined with a big dose of fiscal stimulus, allowed
the Brazilian economy to skate through the
worst of the global recession with relatively
afforded to show that the left-center could
manage a market economy well even in diffi-
cult times. Activism was the order of the day.
sumer durables. The National Bank for Eco-
nomic and Social Development filled the gap
left by the inability of private banks to offer
credit to businesses. The Programa de Acelera-
ção do Crescimento, Lula's flagship public-
investment program, increased spending. An
expanded version was unveiled in March 2009.
of a hole in the budget. However, Lula paid
more than lip service to fiscal discipline: in
mary fiscal surplus, albeit one that required
Meanwhile, regulatory reforms put in place in
the 1990s successfully insulated the Brazilian
financial sector from the worst consequences
of the global meltdown. Two big banks, Itaú
and Unibanco, were merged to create Brazil's
corporated into the Bank of Brazil.
the years immediately preceding the global
recession, there was never much question of
domestic financial woes triggering capital
flight. In fact, Brazil remained a favorite of in-
ternational investors through the crisis so
much so that exporters worry appreciation of
the Brazilian currency (the real) is putting
them at a disadvantage in competing with
economy's fate from that of its international
trade and investment partners could not be
entirely realized, the downturn did prove to
be mild and short in comparison with reces-
sions in developed economies.
cent rate in 2010, predicting what will happen
thereafter is problematic. The forecasters at
the new bank, Banco Itaú Unibanco, argue that
an increase of 2 percentage points in interest
rates will be sufficient to contain inflation,
leaving enough room for healthy economic