Can Dilma Rousseff Fix Brazil?

Rousseff took office on New Year’s Day 2011, and she inherited a resource-rich economy that had grown by 7.5 percent in 2010. She also inherited a world-famous anti-poverty program (Bolsa Família) that has helped millions of Brazilians ascend to the middle class. During the first months of her presidency, it seemed as if Brazil would continue thriving. In August 2011, after the U.S. credit downgrade and the European debt crisis rattled global financial markets, Rousseff bragged about her country’s relative stability: “This is the second time that a crisis affects the world, and it is the second time that Brazil doesn’t shake.” Unfortunately for Lula’s protege, Brazil did shake in 2012: Its exports declined by 5.3 percent; its annual inflation rate stayed close to 6 percent; and its economy barely grew at all, expanding by less than 1 percent. The causes of the downturn ranged from an overvalued currency to an economic slowdown in China, Brazil’s largest trading partner. Last month, Brazil’s current-account deficit hit a record high, with the country’s trade surplus nearly 41 percent lower than it was in December 2011.