From Expansion to Austerity: challenges and risks of the radical fiscal policy turn in Brazil (One Pager 360)
Brazil, in the period after the great financial crisis of 2007–2008, presents a compelling case study of the interactions between fiscal policy and business cycles. The country is noteworthy not only for being one
of the very few that dealt relatively well with the most acute stage of the crisis, maintaining its dynamism throughout most of the 2007–2010 period, but also for the speed of its economic and fiscal deterioration during the 2011–2014 economic slowdown, and the subsequent 2015–2016 recession. The contrast in performance is stark when one observes the decrease in growth of the country’s gross domestic product (GDP), which halved from 4.6 percent per year during 2007–2010—which placed Brazil close to the top third of countries with the best global performance—to 2.3 per cent per year during 2011–2014, which placed the country among the bottom third of countries, and finally culminating in an accumulated collapse of -7.2 percent of GDP during 2015–2016, the worst recession in the country’s history.