The Impact of the Global Financial Crisis on Brazil

Until quite recently I was among those who doubted whether we faced a major crisis in the real economy. When people said that we were in the middle of the greatest financial crisis since the great depression I did not contradict them, but I found one of the interesting aspects of this crisis to be the striking contrast between the gloom and doom prevalent in the financial sector and the buoyancy still in evidence elsewhere. This was especially evident among exporters in the US manufacturing sector, whose historic markets had been largely restored by the correction of the dollar overvaluation except versus some Asian countries, but it was a much more general characteristic. Through the first half of 2008, i.e. for about a year after the financial crisis broke, growth rates continued at historically high levels except among some of the advanced countries. To take an example close to the interests of many here this morning, Brazil reported year-on-year growth of 6.1 percent in the second quarter of 2008. There was much talk of reverse-coupling.