Roots of Brazil's economic ills have always been hidden in plain view
Roots of Brazil's economic ills have always been hidden in plain view

-Editorial-


SAO PAULO — We Brazilians have rarely faced an economic downturn of this magnitude. From April 2014 to September 2015, the country's GDP contracted by 5.8%, and there are no signs that a turnaround is forthcoming. We haven't seen anything like it since the "lost decade" that began in the early 1980s or, before that, in the 1930s.

With the results registered in the third quarter — a 1.7% slip compared to the previous three months — the 2015 GDP is expected to end with a contraction of close to 4%. And with this figure, the hopes that 2016 will bring any breath of fresh air have hereby evaporated. Next year will bring more economic contraction, despite the Rio Olympics. Only in 2017 can we hope for some, albeit timid growth. And that's if we're lucky.


Collapsing domestic demand is affecting all sectors of the economy, including gas and oil companies and the construction industry, which are such vital engines for employment and investment. The breadth of the crisis is as unusual as it is troubling, making it all the more difficult to foresee a possible path to recovery.


The extent to which all of this affects people's daily lives has yet to be entirely assessed, though we can already see a reversal of the positive trends of the past decade. Informal "off-the-books" employment, for instance, is on the rise again, as is youth unemployment. If the least pessimistic forecasts are right, the country will have lost 4.5 million proper jobs by next year.

For these reasons, the current recession will likely last longer than those we went through in 2003 and 2009. In both cases, the Brazilian economy returned to growth less than a year later, and quickly recovered what it had lost. But this time, it's almost certain that the country will reach 2018 with a lower level of production than in 2014.


All of this underscores just how precarious the government's economic model really is. Rather than build any kind of solid foundation, the ruling Workers' Party, or PT, has simply reaped the fruits of a positive global outlook to give away money and buy support among politicians and entrepreneurs for what is ultimately a rather primitive economic project.


There has been no shortage of warnings of the impending failure of the PT's policy choices, which are marked by coarse interventionism and arbitrary efforts to favor this or that sector. In this shady environment, it should be no surprise that corruption and the worst practices of public administration are thriving.


Changing this gloomy picture will require the establishment of a policy that's the exact opposite to what the successive PT governments have built. To start with, our leaders need to establish a system based on productivity, openness and transparency.


If there's one benefit to this situation, it's that our economic situation has deteriorated to such an extent that the need to pursue serious reforms is finally getting the attention it so desperately deserves.

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