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Brazil is now the sixth largest economy in the world. Brazil is enjoying an economic boom, in part due to the reasons discussed in this presentation. The prosperity is flowing down to the middle class. AP reports that Brazilian tourists spent $5.9 billion in the U.S. in 2010. Many would say that the Brazilians, bolstered by a strong currency, saved the retail industry in Miami the last 2-3 years.
Despite the wide reaching economic prosperity in Brazil, there is one area that concerns me. Imports to Brazil have always been tightly controlled in order to protect local industries. This strategy may have been effective when Brazil was a struggling third world country, but today Brazil is emerging as an economic powerhouse with international political aspirations.
Latin Business News reports that Brazil has requested that Mexico reduce auto exports to Brazil by 33% or $1.4 billion this year. If Brazil is going to aspire to a position of international leadership, it should be fostering more trade in LATAM. Such an approach to trade would increase its political clout.
If Brazil were to expand its political influence, especially in LATAM, such an approach would force the U.S. to pay more attention to LATAM. More attention from the U.S. would theoretically foster greater economic development in LATAM and benefit Brazilian exports.
