For several years of recent history, Brazil was seen as a shining example of economic growth and social progress. The South American nation boasts the world’s ninth-largest economy (by nominal GDP), and until fairly recently was on track to become an even more influential world economic player. Then, under the leadership and economic policies of the now-ousted President Dilma Rousseff, Brazil’s big engine stalled. Gross domestic product is shrinking (down by 3.8% in 2015, compared to 7.5% growth in 2010), inflation is rising, the deficit balloons ever larger, and unemployment has jumped to over 11%. Their bonds are rated as junk.
Due to the extraordinary complexity of economics on this scale, it is nearly impossible to pin down a definite cause of such a shift in economic fortune. What we do know is what former President Rousseff’s policies looked like, and therein lies a warning, because they look much like Donald Trump’s. Generally speaking (and this is very general, for brevity’s sake), Dilma Rousseff implemented policies of economic protectionism (restrictions on imports), tax breaks and subsidies for the wealthy and corporations, and new federal spending on projects like infrastructure. An argument can certainly be made that these policies brought about Brazil’s current economic woes. On the campaign trail, Donald Trump embraced these same populist policies, while promising robust growth as a result.
It is important to say here, as economist Monica de Bolle has, that comparing Trump’s campaign promises with events in a separate country is a risky proposition. There are several important differences between the American and Brazilian economies, and the major problem in Brazil could have been implementation rather than the policies themselves. We don’t even know yet how many of Trump’s promised economic policies will actually be implemented once he takes office. However, the broad similarities between Trump’s plan and Rousseff’s failed policies are clear, and as Max Ehrenfreund writes, “Rousseff’s policies arguably offer a cautionary example for newly empowered Republicans in Washington.”
Let’s hope they’re paying attention.