Brazil has coped with the global financial crisis well without much trouble, a local scholar said.
Measures implemented by the government led by President Luiz Inacio Lula da Silva enabled Brazil to achieve that, said Newton Marques, professor at University of Brasilia (UnB), in a recent interview with Xinhua.
The government, under the leadership of Lula, decided to boost the country's economic growth through strengthening the domestic market, although many experts believed that Brazil should step back by cutting expenditures, Marques said.
Brazil's economy is returning to its growth track this year and its growth rate is expected at 7.3 percent this year, the highest in three decades.
The country's economy managed to recover to the positive realm after it saw two negative seasons -- the last quarter in 2008 and the first quarter in 2009.
The positive results should be attributed to the policies introduced by the Lula government, the professor said.
"I also had my doubts, but today I applaud his (Lula's) economic policy...," he said.
Marques recalled that Brazil's situation was peculiar when the financial crisis worsened and contaminated the global economy after the collapse of the U.S. bank Lehman Brothers.
Brazil was growing, not linked to the mortgage lending crisis in the United States, Marques said. It had significant international reserves, worth 200 billion U.S. dollars, which helped the country to "go through the hurricane."
The professor said that the biggest impact to Brazil was the retraction of the international market, with less demand and less capital inflows from many countries.
"Lula' s government was very successful in implementing countercyclical policies. There were tax cuts, incentives to payroll loans (deducted directly from wages), increased credit offer by state banks...," he said.
The professor cited the strength of the Brazilian financial system, much more regulated than in Europe or the United States, as one of the main reasons why the South American country was less affected by the crisis.
"The difference between the U.S. and Brazil is that they did not have a regulated system like ours," he said.
"They had a law, the Glass Steagall Act, separating the financial market and capital markets, which means that they developed regulatory systems that did not communicate. So, a systemic crisis that began on one side could affect the system as a whole," he said.
Brazil has always considered the capital market and the financial system as a single thing and had more control, mainly because the country experienced numerous financial crises in the past decades.
"Stress tests were regularly carried out, and sometimes control was so strict that the financial system was a bit stifled," he said.
Other factors that allowed Brazil to get out of the crisis quickly include the expansion of the country's domestic market.
"Our foreign investments do not face problems, and Brazil became a creditor of the IMF. The liquid debt is negative, we have more to receive than obligations," he said.
He cited the macroeconomic stability as a score of the government's economic policy, which allows a fluctuating exchange rate and is inflation targeted.
"We will turn 20 years of monetary stability, which promoted tranquility to businesses and consumers to finance debt," he said.
To ensure a continued economic recovery, the country needs to move forward in other areas, such as reducing inter-bank fees, and carrying out tax and welfare reforms.
"We are almost at full employment, some scholars say that we can grow about 7.5 percent annually in a sustainable way for several years," he said.
"But to reach that, I think we have to fix a very serious problem, which is the shortage of skilled labor," he added.
The lack of labor force may lead to wage and price hikes which likely undermine the monetary stability program.
He called for greater investment in training programs and in research and development.
The professor said another problem was the infrastructure.
He said Brazil had capital, natural resources and abundant water, stressing that if those obstacles that Brazil faced could be cleared, Brazil would be consolidated as a major global economic player.
Measures implemented by the government led by President Luiz Inacio Lula da Silva enabled Brazil to achieve that, said Newton Marques, professor at University of Brasilia (UnB), in a recent interview with Xinhua.
The government, under the leadership of Lula, decided to boost the country's economic growth through strengthening the domestic market, although many experts believed that Brazil should step back by cutting expenditures, Marques said.
Brazil's economy is returning to its growth track this year and its growth rate is expected at 7.3 percent this year, the highest in three decades.
The country's economy managed to recover to the positive realm after it saw two negative seasons -- the last quarter in 2008 and the first quarter in 2009.
The positive results should be attributed to the policies introduced by the Lula government, the professor said.
"I also had my doubts, but today I applaud his (Lula's) economic policy...," he said.
Marques recalled that Brazil's situation was peculiar when the financial crisis worsened and contaminated the global economy after the collapse of the U.S. bank Lehman Brothers.
Brazil was growing, not linked to the mortgage lending crisis in the United States, Marques said. It had significant international reserves, worth 200 billion U.S. dollars, which helped the country to "go through the hurricane."
The professor said that the biggest impact to Brazil was the retraction of the international market, with less demand and less capital inflows from many countries.
"Lula' s government was very successful in implementing countercyclical policies. There were tax cuts, incentives to payroll loans (deducted directly from wages), increased credit offer by state banks...," he said.
The professor cited the strength of the Brazilian financial system, much more regulated than in Europe or the United States, as one of the main reasons why the South American country was less affected by the crisis.
"The difference between the U.S. and Brazil is that they did not have a regulated system like ours," he said.
"They had a law, the Glass Steagall Act, separating the financial market and capital markets, which means that they developed regulatory systems that did not communicate. So, a systemic crisis that began on one side could affect the system as a whole," he said.
Brazil has always considered the capital market and the financial system as a single thing and had more control, mainly because the country experienced numerous financial crises in the past decades.
"Stress tests were regularly carried out, and sometimes control was so strict that the financial system was a bit stifled," he said.
Other factors that allowed Brazil to get out of the crisis quickly include the expansion of the country's domestic market.
"Our foreign investments do not face problems, and Brazil became a creditor of the IMF. The liquid debt is negative, we have more to receive than obligations," he said.
He cited the macroeconomic stability as a score of the government's economic policy, which allows a fluctuating exchange rate and is inflation targeted.
"We will turn 20 years of monetary stability, which promoted tranquility to businesses and consumers to finance debt," he said.
To ensure a continued economic recovery, the country needs to move forward in other areas, such as reducing inter-bank fees, and carrying out tax and welfare reforms.
"We are almost at full employment, some scholars say that we can grow about 7.5 percent annually in a sustainable way for several years," he said.
"But to reach that, I think we have to fix a very serious problem, which is the shortage of skilled labor," he added.
The lack of labor force may lead to wage and price hikes which likely undermine the monetary stability program.
He called for greater investment in training programs and in research and development.
The professor said another problem was the infrastructure.
He said Brazil had capital, natural resources and abundant water, stressing that if those obstacles that Brazil faced could be cleared, Brazil would be consolidated as a major global economic player.
