Skip to: Content
Skip to: Site Navigation
Skip to: Search


Why Brazil is weathering the global financial crisis this time

President Luiz Ignácio Lula da Silva met with French President Nicolas Sarkozy in Paris Wednesday before heading to the G-20 summit in Britain.

(Page 2 of 3)



"The biggest problem we face is that only 20 percent of those who come here have the minimum qualifications to get one of our jobs," Mr. Leal Borges said. The minimums include a high school degree and an ability to do basic work on a computer.

Skip to next paragraph

The ax for Mr. Rocha and 45 other workers at a trucking company came three months ago.

Since then, while job hunting, Rocha uses the bus or the subway instead of driving, and he didn't buy a $500 computer for his daughter as planned. Still, he's spent half of the $900 in savings he'd accumulated.

"It's a drag," said Rocha. "I have to provide for my family. But you can't lose hope. I think I'll find another job in two months."

Economic analysts would probably not be as optimistic in the short term.

Forecasters revised downward their projections for 2009 in mid-March, after the government reported that the economy shrank by 3.6 percent in the final quarter of 2008.

Guilherme Nobrega, the chief economist for Sao Paulo-based Itau Securities, now expects Brazil's economy to grow by 0.6 percent in 2009, down from his last estimate of 1.5 percent.

"Manufacturing companies are getting hit hardest because they depend so much on credit," Mr. Nobrega said. "The economy is unraveling."

Chemical, timber, mining companies – to cite three major exporters – are laying off workers as their overseas orders drop.

Loans have dried up for farmers, and agriculture production is down by about 5 percent, said Mauro Lopes, a researcher at the Getulio Vargas Foundation, a Rio-based research organization and university.

Imports have dropped across the board.

"Six months ago, I sold 240 boxes of [imported] tennis ball canisters and 30 tennis rackets," Luiz Salemi, owner of a sporting goods store in downtown Sao Paulo, said on a recent afternoon, as he waited for customers. "In February, I sold 48 boxes of tennis balls and 10 rackets. It costs 40 percent more to sell imported goods" because of the real's decline versus the dollar.

Brazil's car industry also has taken a major hit.

Sales of new vehicles plunged to 178,000 in November from 269,000 in September, said Jackson Schneider, president of the carmakers' Sao Paulo-based trade association.

General Motors' Brazil branch responded by laying off 1,600 temporary workers. The division is considered among the stronger parts of GM, which faces a possible bankruptcy.

Virtually all of the carmakers furloughed employees in December.

Some 2,000 workers at auto parts companies have lost their jobs while another 16,800 have suffered an average 13 percent wage cut, said Miguel Torres, who heads the parts-workers union in the state of Sao Paulo.

Permissions