Brazil Declines in Global Competitiveness Index

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Adding to Brazil’s economic woes, a report released on Tuesday, September 29th, shows the country falling eighteen spots in a global competitiveness index. According to the World Economic Forum’s Global Competitiveness Report 2015-2016 the country’s weak macroeconomic scenario and recent corruption scandals have undermined the country’s competitive ability.

Brazil has fallen to the 75th position behind other BRICS countries such as India, South Africa and Russia, as well as other smaller Latin America economies, such as Uruguay, Peru and Costa Rica.

“The country’s performance is uneven across the Index. With a large fiscal deficit and rising inflationary pressure, Brazil’s weak macroeconomic performance is negatively impacting the country’s competitiveness,” stated the report, noting that corruption scandals have undermined the trust in institutions, both public and private.

The Forum report shows that the country fell in nine of the twelve sections analyzed, including health and education. According to the report the country’s main competitive strength is its large market size.

The country’s competitiveness is not expected to improve anytime soon. The latest analysis made by market research company Capital Economics, shows Brazil slipping deeper into the crisis, with constant downward revisions of GDP results for 2015 and increasing inflation. In addition, says the research company, “the political crisis enveloping President Rousseff is intensifying.

Add a deteriorating fiscal position and mounting concerns about the outlook for the country’s largest export market (China) to the mix and it’s no surprise that Brazil’s financial markets have sold off heavily over the past month.” For analysts the deteriorating economic and political scenario has led to a significant devaluation of the Brazilian real in relation to the US dollar, which in turn has discouraged both domestic and foreign investments in the country.