With a population of nearly 200 million, Brazil is Latin America’s largest economy and part of the BRIC (Brazil, Russia, India, China) group of countries that are poised to be the world’s major superpowers by 2050.
The boom in commodity prices is partly responsible for Brazil’s success. The unemployment rate for April 2011 is one of the lowest on record (4.6 per cent) and remained stable until June (6 per cent); credit is booming, particularly for the working classes who have moved out of poverty and into an ever-expanding middle class. Income inequality is still high, but has fallen sharply in recent years. Even so, the most recent UN Gini Index report (which measures global income inequality levels) rates Brazil as the tenth most unequal country in the world.
The main challenge facing Brazil is inflation. As with everywhere, inflation is being driven by rising food and fuel costs, but Brazil’s labour market is tight and increases in prices, as well as real wages are expected. Real wage growth accelerated to 4.0 per cent year on year in May 2011 from 1.9 per cent in April. On a seasonally-adjusted basis, real wages increased 2.2 per cent m/m s.a., the fastest growth since July 2010.