Photo: USP Imagens
Is Brazil's economic crisis over? Not for everyone.

Brazil’s recovery from its economic crisis is unequal. Photo: USP Imagens

According to the International Monetary Fund (IMF), Brazil is recovering from its worst economic crisis. The fund predicts a 1.9 percent growth in 2018, and 2.1 percent next year. That’s not too bad for a country that, just two years ago, was shrinking at a rate of 3 percent. However, not everyone is enjoying the recovery.  While Brazil’s economy is showing signs of life, some states are still left struggling.

Tendências, a Brazilian consulting firm, has recently shown that between 2017 and 2018, Brazil’s GDP should accumulate an expansion of 3.9 percent. States like Pará and Mato Grosso, which rely heavily on agribusiness activities, should have an 8 percent growth over that span. However, in other states such as Acre and Rio Grande do Norte, the rate is going to be zero. You read that correctly: zero.

</p> <p>By the end of the year, only one-third of Brazilian states are expected to reach their pre-crisis levels of economic activity.</p> <p>Rio de Janeiro is among the worst cases. After years of pillage by a gang of corrupt politicians, the state has been left in near bankruptcy. With a public debt of over 100 billion BRL and three former governors currently in prison for corruption, Rio is no longer able to provide basic services to its entire population. An oil boom is set to help the local economy, but the state’s public finances are depleted. In 2016, the local government declared a state of “public calamity.” Since then, it has failed to pay its servants or manage its security crisis.</p> <p>Now, Rio is under a federal intervention.</p> <p>But while Rio might be in a bad place, states in the northeastern region are finding themselves in even more dire conditions. Those regions, where the private sector is not dynamic and public investments are the motor of the economy, will grow far less than richer states. Pernambuco, which depended on billion-dollar investments from Petrobras, owns the least-dynamic economy of the federation right now.</p> <p>Between 2008 and 2014, the state received 36 billion BRL from investments made by Brazil’s National Development Bank. As the funding dried up, the local economy stagnated. Last year, until November, it had grown only 0.3 percent. Unemployment rates are at 18 percent – the highest in the country. And right now, the state of Pernambuco is furthest from returning to its pre-crisis levels.</p> <p><div class="infogram-embed" data-id="b77a3dca-e3d3-41cd-9ffb-7fb02414f0ec" data-type="interactive"></div><script>!function(e,t,s,i){var n="InfogramEmbeds",o=e.getElementsByTagName("script"),d=o[0],r=/^http:/.test(e.location)?"http:":"https:";if(/^\/{2}/.test(i)&&(i=r+i),window[n]&&window[n].initialized)window[n].process&&window[n].process();else if(!e.getElementById(s)){var a=e.createElement("script");a.async=1,a.id=s,a.src=i,d.parentNode.insertBefore(a,d)}}(document,0,"infogram-async","//e.infogram.com/js/dist/embed-loader-min.js");</script>

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MoneyFeb 26, 2018

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