BRAVO Forum: Challenges & Opportunities for Brazil

Brazil has prepared itself in recent years to become a leading nation in the international arena through macroeconomic and social changes that were carried out by governments with different political orientations but a similar aim.

Today, Brazil is experiencing a unique moment in its history. However, although it is essentially immune to the economic crises in more-developed economies, the country also has a unique opportunity to complete urgent reforms that will make it possible to reduce what is disdainfully known as the “Brazil cost” and to release the shackles that prevent the nation’s more rapid and sustainable development.

The priority in this strategic agenda should be to attack the chronic problems of infrastructure and education. Many steps have been taken in this direction, through initiatives such as the Accelerated Development Program (PAC) and Mi Casa Mi Vida( (My House, My Life), but to be successful both the government and the private sector must invest more heavily in the construction of ports, highways, airports and railways, among other things, as well as in the development and training of individuals.

In education, Brazil must go beyond quantitative goals such as universal access, focusing not only on school-age children who are not in school but also on a consistent improvement in the quality of what they are taught. Education in Brazil has evolved, but the country still lies in 115th place in the Global Competitiveness Reports ranking.

On the economic front, significant pro-gress has been made. We have managed to control inflation, we have solid macroeconomic fundamentals, and we have companies that compete internationally. However, if adequate defense measures are not taken to revert the impact of the global economic crisis, the consequen-ces could be devastating, in particular for our manufacturing sector.

One of these effects is the so-called “foreign-exchange wars,” which have a significant and negative impact on our economy, as well as putting the country on the radar of speculative investment, which does not bring any long-term structural and economic benefits. The Brazilian real is very strong against the U.S. dollar, which has a direct negative impact on Brazilian exports, as well as subsidizing imports. The Brazilian government has taken measures to control the high real, but the battle has not yet been won.

Another aspect that reinforces these challenges is the Brazilian interest rate – and, in particular, the bank spreads. They are among the highest in the world, representing a high cost for the government, businesses and consumers, diverting resources and increasing the cost of investment.

However, while manufacturing suffers, the Brazilian service sector has demonstrated solid growth in recent years, largely thanks to the improving income of sectors of the population previously excluded from consumption. This sector also is relatively sheltered from the “Brazil cost and the FX war” as the competition among businesses occurs on the “domestic battle field”.

Brazil has a natural advantage in the area of agricultural and mineral commodities, and the country has consistently demonstrated itself to be one of the main world players. Moreover, if we  previously had a leading position in agribusiness and iron, we could now hold an even more prominent position on the global stage with the development of the pre-salt reserves. However, for abundant oil and gas as well as the large-scale production of other commodities to generate development, we must add value to the raw material. Here again, Brazil faces the challenges of our industry and our education system, which is responsible for producing the qualified workers the country needs.

Growth in Brazilian manufacturing in recent years has been far below its potential, and what is desirable. Looking ahead, we must overcome the challen-ges that emerge from the opportunities that strong domestic demand and national policies impose on our companies.

In this regard, the government is creating and improving industrial-sector policies and working with the private sector, understanding its needs and deficiencies, and seeking to establish the conditions that will ensure new and growing benefits for the country. However, it is essential that we progress further, in particular in the implementation of the measures that are being elaborated.

We have the necessary political, economic, social and environmental conditions. The Brazilian government has record popularity. The nation has solid institutions, businessmen with a “killer instinct” and marvelous people, as well as natural wealth and a modern and rigorous environmental legislation that protects strategic forests, natural springs and the biomass.

This enormous potential, combined with the work that is already under way, means Brazil is moving toward becoming a more socially inclusive, industrialized nation, in a position to contribute even more to the solutions the world seeks.

Marcelo Odebrecht

Photo © Paulo Fridman

Representing the third generation of the Odebrecht family, Marcelo Odebrecht is now CEO at the company founded by his grandfather, Norberto, in 1944. Besides holding a leading position in the engineering, construction, chemical and petrochemical sectors in Latin America, Odebrecht is also a player in the following segments: bioenergy, environmental engineering, defence and technology, real estate, transportation and logistics, oil and gas and stakes and investments. Present in 20 countries, Odebrecht brings together around 170,000 professionals of 60 different nationalities. He received a Bravo Business Award in 2011.

 

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