Brazil's (unofficial) economic forecast

Saleh Khaddour (L) and Ana Luiza Freire (R) at a bar near Mackenzie Presbyterian University in Sao Paulo. He is optimistic about Brazil's economy, while she is pessimistic. (Seth Kugel/GlobalPost)

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SAO PAULO — Yesterday in Brasilia, the government’s Institute of Applied Economic Research issued its quarterly report on the economy. And it was rosy: The worst of Brazil’s short-lived crisis is over, the economy will grow 2 percent in 2009, the stock market has potential and the labor market, currently in the dumps, could start improving in the third quarter.

But not all forecasts are so upbeat. Just ten days ago, Morgan Stanley’s pessimistic Latin American research team predicted that the Brazilian economy will shrink a disastrous 4.5 percent, the labor market will have a bad year and tax revenues will slide.

So what's a reporter to make of such conflicting information?

Since the Morgan Stanley analyst responsible for the report, Marcelo Carvalho, was traveling in Europe and unavailable, and government economists are, well, government spokespeople, GlobalPost turned to substitutes: Ana Luiza Freire, on behalf of Morgan Stanley, and Saleh Khaddour, on behalf of the government. Both are college students who were drinking beer last night at a nameless, smoke-filled corner bar near Mackenzie Presbyterian University in Sao Paulo.

Freire, a 20-year-old advertising student, called herself “very pessimistic.” It’s an attitude born from seeing friends laid off in Sao Paulo, and from hearing complaints about increasing costs from her father, who owns a pharmacy chain in her home state of Minas Gerais.

To her, the government predictions that the worst of the crisis is over are wrong. “I don’t agree,” she said. “It hasn’t even started yet.” Her unemployed friends, who worked mostly in the clothing industry, of coure are spending less. But even those who kept their jobs are putting away up to 30 percent of their salary “for when the crisis affects them.”

“One day, it may change,” she said. “But now the crisis is hitting hard. What happens in the United States affects the entire world. I doubt it will improve right now.”

Nineteen-year-old Khaddour, meanwhile, said Brazil’s recent economic dynamism will carry it through. “Even though before the crisis, growth was much greater,” he said. “The crisis has only diminished the rhythm of growth.”

http://www.globalpost.com/dispatch/brazil/090326/brazils-unofficial-economic-forecast