I am just back from Sao Paulo, Brazil, where I was giving a keynote presentation alongside Brazil’s Finance Minister and other senior figures at the 20th Annual Meeting of the Brazilian chemical industry association, ABIQUIM.
As we all know, Brazil is facing difficult times. I lost count of the number of times the word “crisis” was mentioned during the meeting – the economy is in recession following the collapse of its commodity exports to China; major corruption scandals circulate around the state-owned oil company, Petrobras; and the country’s President, Dilma Rousseff, is threatened with impeachment. Ordinary life also remains difficult for the majority of Brazilians:
- GDP/capita at $6k is just 47% of the global average, despite rising 35% as the economy boomed due to China
- It peaked in 2013, and may well fall now that the economy has hit problems
- The core problem is that GDP/capita had stagnated at around $4k from 1980 – 2000
A key issue for today, as I discussed in my presentation, is that Brazil is now seeing its former ‘demographic dividend’ turn into a ‘demographic deficit’:
- Brazil’s population rose 70% from 122m in 1980 to 208m this year, but will rise just 10% to 229m by 2030
- The reason is shown in the slide – its high fertility rate in 1950 has now fallen 70%, from 6 babies/woman to just 1.75 babies/woman
- At the same time, life expectancy has risen by 40%, so the average Brazilian can now expect to live a further 18 years at age 65 – fantastic news for individuals, but a major strain for the country’s finances
As a result, Brazil’s median age is set to nearly double from 19 years in 1950 to 37 years by 2030.
In the past, Brazil always had the reputation of being ‘the country of tomorrow’. Brazilians would all agree that things weren’t perfect “at the moment”, but believed they were about to improve. And for a period, during the China boom decade, it seemed as though this confidence was well-founded. Today, however, the picture is not so rosy.
The good news, however, is that Brazil’s chemical industry – like other key parts of the economy – is run by people with plenty of energy and vision. If the dead-weight of corruption and political cronyism could be removed, then it could move ahead very strongly. Brazil is, after all, the 6th largest chemical industry in the world, with a domestic market of over 200m people.
In addition, I heard very positive comments from senior executives on the new administration in Argentina. President Macri has only been in power a few days, but is already moving fast to try and clear up the mess he has inherited. And elsewhere in the region, the opposition victory in Venezuela’s parliamentary elections is spurring hope that political change might finally be underway – although political crisis is likely to be the immediate result.
It is no exaggeration to say that a continuation of the status quo would be a disaster for Brazil. But real and sustainable change is possible if leaders come forward who focus on sensible policies rather than slogans. Such a change would also make a major difference in the rest of the continent, and support those in Argentina, Venezuela and elsewhere who are trying to change the failed policies of the past.