The Brazilian government announced yesterday the first phase of a 25-year stimulus package designed to reignite the Brazilian economy. The plan includes more than $60 billion of investment in 10,000 kilometers (6,200 miles) of railways and building or widening 7,500 kilometers (4,660 miles) of federal highways, with that to be followed by investments in ports and airports.
Under the new strategy, the Brazilian government aims to double the capacity of the country’s transportation system to reduce significant infrastructure bottlenecks – a critical step to fostering long-term growth. This would help bring the export environment in Brazil closer in line with those of other BRIC countries. In general, exporting from Brazil is twice as expensive as exporting from China, and 1.5 times more expensive than from India.
The administration also hopes to boost labor know-how – one of the country’s main limitations – by handing over to the private sector the responsibility for developing and managing the new infrastructure. The government will grant concessions for construction, maintenance and operation of the projects through a competitive bidding process. This new emphasis on investment is a different strategy from previous growth strategies focused on increasing local consumption
This year Brazil’s economic growth is expected to be less than 2 percent—the country’s worst performance since 2009 and a sharp slowdown since the 7.5 percent seen in 2010.