Econintersect: Infrastructure is grossly insufficient in Brazil and it is killing that country’s economy. Costs for shipping a container of exports out of Brazil is far higher than either China or India and the delays are notorius, according to an article in the Financial Times.
To address this problem, Brazilian president Dilma Rouseff has announced a multi-pronged initiative to improve infrastructure and stimulate the economy which has been stagnating in the past year. One prong involves a stimulus package aimed at infrastructure improvement, amounting to $65.6 billion, more than half to be spent in the next five years.
Click on picture for larger panoramic view of Rio de Janiero.
Another part of the initiative involves the selling of concessions in nine highways and 12 railroads as the first step in increasing private investment. Private companies will operate about 4,300 miles (7,500 km) of highways and 5,800 miles (10,000 km) of railways under the plan.
The Financial Times provided the following quotation from the announcement event in Brasilia:
The measures would double the capacity of the country’s main highways, transport minister Paulo Passos said at the event.
The Brazilian economy was booming coming out of the Great Recession but GDP growth slowed to 2.7% in 2011 and may not even reach 2% in 2012. The following graph from Trading Economics shows the GDP collapse over the last three quarters (rates are quarter-to-quarter changes).
The new stimulus plan is much larger than a $4 billion effort announced at the end of June.
Brazil has a daunting four years of infrastructure challenges ahead as it prepares to host the 2016 Summer Olympic Games.
Brazil unveils $66bn stimulus plan (Joe Leahy, Financial Times, 15 August 2012)
Brazil: Stimulus is Announced (Associated Press, The New York Times, 28 June 2012)
Brazil GDP Growth Rate (Trading Economics, 16 August 2012)