An industrial power and economic giant, ninth world GDP measured by purchasing power parity (PPP, 2007), Brazil is the largest country in area and population in Latin America and the Caribbean.

Although it has had a history of economic boom and bust and its development has been hampered by high inflation and foreign debt, reforms in the 1990s and ongoing sound macroeconomic and social policies have resulted in an extended period of stability, growth and social gains.

Brazil has immense natural resources and a strong industrial development, but still suffers from a wide gap between rich and poor. Innovative social programs and a more inclusive growth in recent years have been gradually decreasing this inequality.

Growth and stabilization

In 2002, Luiz Inácio Lula da Silva of the Workers Party was elected president promising sound fiscal management and social reforms intended to lift millions of Brazilians from poverty, create jobs and income, and decrease Brazil’s vulnerability to external crisis.

In his first term he oversaw a highly successful two pronged strategy that linked economic stabilization, growth incentives and social inclusion, which lead to a landslide reelection in 2006.

Although Brazil has made enormous progress in decreasing the destruction of the rain forest and other sensitive biomes due to the encroachment of the agriculture frontier, there are still huge challenges in these areas, such as the unequal land distribution and management, as well as enforcement capacity.

The country is also gaining a much higher profile in the international community, assuming a leadership role in areas such as climate change, trade, biofuels, AIDS, biodiversity and social technology.

Brazil was able to weather the global financial crisis with relatively minor impacts. The country was one of the last to go into recession in 2008 and among the first to resume growth in 2009. However, higher levels of sustained growth remain a major challenge for the Brazilian economy. Macroeconomic stability has laid the foundations, but average growth has remained below the global and Latin American averages even before the global crisis.

Despite advances in microeconomic and institutional reforms, potential growth is still limited by various barriers and regulations, as well as inadequate infrastructure, poor business climate, high tax rates, high cost of credit and rigid labor markets.

The quality of governmental services in relation to expenditures also remains relatively low compared to other countries.

Growth plan

The Growth Acceleration Plan launched in 2007 to increase investment in infrastructure and provide tax incentives to encourage faster and more robust economic growth is credited as one of the major factors behind the country’s 5.1% growth in 2008 and its quick recovery from the crisis.

Brazil experiences extreme regional differences, especially regarding health, infant mortality and nutrition indicators. Indicators in the richer South and Southeast are normally much better than in the poorer North and Northeastern regions.

Although steadily decreasing, poverty and inequality remain at relatively high levels for a middle income country, and there is still a large gap in access to pre-school and secondary education. After having reached universal coverage in primary education, Brazil is now struggling to improve the quality and outcome of the system, especially at the basic and secondary levels.

The country also faces important development challenges in areas that include the combination of the benefits of agricultural growth, environmental protection and the sustainable development the Amazon and other biomes.

The Bank’s main objective is to help Brazil achieve strong sustainable growth, to level conditions and development opportunities for its population. The $ 7 billion Partnership Strategy of the World Bank enables it to act in a catalytic and focused manner to helping Brazil achieve its own defined goals.

IIn October 2009, there were 62 IBRD projects in activity in Brazil, for a total of $ 8.4 billion in commitments. Another 16 Global Environmental Fund, Rainforest Fund, carbon finance and guarantee projects were also active, totaling $ 268 million in grants and guarantees.

Some of the active projects include support for the social flagship program Bolsa Família, the internationally renowned AIDS and STD project, the Amazon Region Protected Areas, the Rural Poverty Reduction Projects in the Northeast and the several major urban and interventions.

The Bank also uses its global network to ensure that other countries benefit from Brazil’s knowledge in areas where the country is an acknowledged global leader, as in clean energy, tropical agricultural research, conditional cash transfers, AIDS and community driven development.

A More Competitive Brazil: Stimulating Sustainable Growth
The Bank’s partnership with Brazil is based on assistance from the IBRD for sustained, broad-based growth, in parallel with backing from the IFC to the private sector.

The Bank’s support for increased productivity and investments focuses on more efficient infrastructure and competition regulation, strengthening the financial sector, achieving a modern innovation policy, and a more favorable environment for business development, especially for small and medium-size enterprises.

The Bank also supports fiscal and social security reform efforts as a basis for better social, fiscal and macroeconomic performance in Brazil.

 A More Equitable Brazil: Investing in People

The Bank’s support in the social sectors focuses on reaching the poorest and achieving higher levels of quality and efficiency in social services.

Support to social protection was expanded through technical and financial assistance to national programs such as Bolsa Família, which reduces poverty in the short term, by providing small monthly cash payments to more than 11 million families, but also in the long term, breaking its transmission to the next generation by helping keep children in school and under regular medical supervision.
 
A More Sustainable Brazil: Managing Natural Assets for Better Quality of Life

The World Bank’s support for a sustainable Brazil is directed at improving the quality of life through better local services in urban and rural areas, and for efficient management of Brazil’s abundant natural assets.

Indicators show progress on protection and sustained development of the large biomes. In addition, legal allocation of water rights has increased in many important hydrographical basins, facilitating greater sustainability in water use and resource management. However, sanitation and pollution control have not shown significant advances.

In recent years, Brazil has improved its housing and rural electricity programs, as well as its environmental legislation.

The Bank has responded for the call of more support to government initiatives which ally environmental protection and sustainable development for populations in the Amazon, and has developed a Framework for engagement in development initiatives in this sensitive biome. The framework was extensively consulted with government, academia, private sector and national and international civil society.

FRAMEWORK OBJECTIVES Stabilize Amazonia’s contribution to nature conservation and global environmental services. Help Brazil manage the flow of other natural resources and goods in the region within the context of sustainable development. Increase access to basic services for the population living in the Brazilian Amazon. Ensure employment and economic growth.

Other programs in the Bank’s Brazil portfolio include the US$1.3 billion First Programmatic Development Policy Loan for Sustainable Environmental Management, which supports Brazil’s ongoing efforts to improve its environmental management system and integrate sustainability concerns in the development agenda of key sectors such as forest management, water and renewable energy. The initiative, approved in March 2009, will also integrate Brazil’s climate change agenda across sectors.

Brazil’s project portfolio spans across several areas of the economy, civil society and the environment, where it has made significant impacts in the lives of people, including, especially, those amongst the most vulnerable.

The Bolsa Família Program has technical and financial support from the World Bank and is considered one of the main reasons behind the significant social results achieved by Brazil in the last years.

The Program reaches over 11 million families - more than 46 million people - a large part of the country’s low income population, and was recently expanded as part of the Government’s efforts to shield the poorest from the economic slowdown.
       
In keeping with its commitment to help improve the quality of life of the rural poor, the World Bank put its weight behind the Ceará Integrated Water Resource Management Project, which helped complete a canal of over 200 kilometers in Fortaleza, thus ensuring water provision for over 2 million people for 30 years in one of Brazil’s poorest states.

In the future, the canal will be extended to a nearby port and industrial district, helping create jobs and boosting the state’s growth.

Health and Education

notably, the Family Health Extension Program, which provides medical attention to vulnerable groups that do not have easy access to the hospital system.

Vaccination coverage and child nutrition has also improved under the program. Additionally, with World Bank help, Brazil developed one of the most encompassing and efficient strategies in the world to slow the rate of infection and to care for those affected by HIV/AIDS.

The program has stabilized the advance of the epidemics through free distribution of drugs and focused educational and awareness campaigns.

The Bank has also been involved in providing assistance for small scale agriculture and production in innovative ways, which empower local communities in the poor Northeast and other regions to do their own investments and manage their own production. A second generation of these projects is linking the small producers to markets, further increasing income and wellbeing.

CONTACTS:
 

Mauro Azeredo
Communications Officer (in Brazil)
email: mazeredo@worldbank.org