Brazil Lags Behind Its BRICS Rivals

Two numbers sent a jolt through the government of Brazilian President Dilma Rousseff in March. The first was the gross domestic product figure for 2011: Brazil GDP grew only 2.7 percent last year, vs. 7.5 percent in 2010. That sorry statistic made Brazil the laggard among the BRICS nations (Brazil, Russia, India, China, and South Africa). The second number hurt, too: January industrial output contracted 3.4 percent from a year earlier. Rousseff’s strategy—to leverage Brazil’s strength to build up a world-class manufacturing power—is threatened.

Rousseff’s impulse is to protect Brazilian industry. In that respect she hasn’t strayed far from her days as a graduate student studying developmental economics with some of Brazil’s most left-wing professors. Many of Brazil’s companies from the textiles, shoe, electronics, and other industries are urging her on, as she’s imposed tariffs on shoes, chemicals, textiles, and even Barbie dolls. Under pressure from automakers, which saw imports jump 30 percent last year, the government renegotiated a trade deal in March that caps car imports from Mexico for three years.