The Central Bank, Again in a Tight Spotbrazil S New Role in International Affairs

The Central Bank, again in a tight spotBrazil’s new role in international affairs

News from the September October issue of The Brazilian Economy, an e-publication of the Brazilian Institute of Economics ( ) of the Getulio Vargas Foundation ( ).

The IBRE Letter points out that In this special issue on foreign policy, Brazilian and foreign experts look into the developments, implications, and burdens of Brazil’s new role in international affairs.

there are several signs that the Brazilian economy is recovering at full speed. Brazil’s grow in 2010 may vary widely, from 4.5% to 7%. From the perspective of the Central Bank of Brazil, such a wide range of GDP projections poses a challenge for monetary policy to curb inflation. It is still too early to guarantee that inflationary pressures are on their way back. But it is no longer admissible, on the other hand, to ignore this risk.The relations of Brazil with the United States and the countries of South America resemble a cautious and complex political game of chess. Today, thanks to its large vibrant economy, market-oriented policies, and stable democracy, Brazil is seen as a respected interlocutor, skilled negotiator, and independent mediator, able to take shortcuts and find collaborative solutions among countries of diverse political persuasions and social backgrounds. “Having Brazil as a permanent member of the UN Security Council, with or without a veto, should be very beneficial,” suggests Victor Bulmer-Thomas in the current issue of The Brazilian Economy. In particular, “Brazil could serve as a center of development and political stability in Latin America.” But Brazil’s new role has been challenged in South America by competing political currents, such as the more radical Venezuelan-born Bolivarianism. To strengthen its role, Brazil counts on the change of views in Washington, as the Obama Administration is searching for a reliable partner at the negotiating table in a region marked by contrasts and challenges.

In an interview in the same issue, Former President Fernando Henrique Cardoso gives the first indications of how the Brazilian Social Democratic Party (PSDB) will challenge the Workers’ Party (PT) President Luiz Inácio Lula da Silva’s candidate in the race to occupy the Presidential Palace of Planalto. “No use for President Lula to say that the social programs, the pre-salt oil fields, and the stability were born in his administration. The elections will be won by who inspires confidence and gets the voter to say ‘this person will get us ahead.’ Voters cast their ballots thinking about the future, not the past,” he says. For Fernando Henrique Cardoso, the Acceleration Program (PAC) and the pre-salt are being used by the administration as electoral campaign instruments.

Under pressure from various civil society organizations and globalization, the Brazilian corporations are adopting environmentally sustainable practices. Now, sustainability is one more aspect of their business, reports Sônia Araripe.

Brazil is facing rapid socioeconomic shifts that present the farm sector with new challenges. Constanza Valdes, Ignez Vidigal Lopes, and Mauro de Rezende Lopes examine whether Brazil’s farm sector can meet the increased demand for food.Finance Minister Guido Mantega says that “because of its domestic market potential, and because inflation has been kept under control and the country’s foreign accounts were unshaken, Brazil will emerge from the global crisis stronger.” He assures us that the third quarter started with growth already at about 4%, and year-end GDP will be positive, close to 1%. In 2010 the Minister expects that real Brazilian GDP will grow 4.5% to 5%: “There’s a new world ahead.”