Is Brazil's economy in danger of overheating? -- Post by: CNN's Fareed Zakaria

Here in America, we've had some rare good news this week. Our Women's Soccer Team has been making us proud at the World Cup in Germany, but, of course, they don't call it soccer over there. It's football. And the football that makes the most news is Men's Club Football.

Every summer, soccer fans around the world are fixated on their favorite players. These guys are traded from team to tame, like tech stocks, for many, many millions.

Among the players likely to make a move is Carlos Tevez. He's an Argentinean who left home to play in England's lucrative Premier League. Tevez is one of the world's most lethal goal scorers, and he has a salary to match. Manchester City pays him $21 million a year, about what Derek Jeter makes. And that's just salary. Add to it his multimillion-dollar endorsements.

You might be surprised to know who's trying to buy Tevez. Not sheiks or oligarchs, but a club from Sao Paulo, Brazil -- Corinthians. They're offering $55 million to buy back this soccer superstar. And that's just the transfer fee.

Now, Tevez may or may not be sold, but it's a huge statement of intent, and it's yet another sign of a rising, powerful Brazil, not just in soccer, but in many fields. For a decade now Brazil has been a Latin American success story, a record 7.5 percent growth last year, 33 million people lifted out of poverty in eight years, household incomes growing consistently faster than GDP and more.

These are great statistics, and they're often attributed to one man -- Luiz Inacio Lula da Silva led Brazil for eight successful years. President Obama once described him as "the man."

His Bolsa Familia welfare scheme brought prosperity to millions of Brazilians, a heady alchemy of subsidized housing, generous pay rises, easy access to credit, has made Brazil's favelas a more prosperous place. You could even say it's put an extra zing in the samba moves at Rio's Carnival. But the party might be soon over. Rising agriculture and a surge in commodity prices over the last decade have fueled Brazil's boom, but they've taken the pressure off the government to do structural reforms. Economists worry that Brazil's growth has turned into a bubble and it is about to burst.

That's a worrying problem, not just for a country of 200 million, but for the entire continent that looks to Brazil as a model for growth. In the past few weeks, the Brazilian real, its currency, has hit a 12-year high against the dollar, a surge of nearly 50 percent in two years. That might sound good, but it's actually making Brazilian exports much less competitive. Interest rates in Brazil have now crossed 12 percent, so borrowing costs are very high.

Brazil's new president, Dilma Roussef, is the country's first female leader and she will need to make tough decisions. Brazil's savings rate is just 17 percent of GDP. Now, that's what developed markets average. But developing countries usually have much higher savings rate, around 30 percent. China, for example, is closer to 50 percent.

And then there's the issue of what to do with your money. China plows more than 50 percent of its GDP into infrastructure. For Brazil, that figure is just two percent. For a developing country that number needs to go up.

So keep an eye on Brazil. It will be the center of the world's attention in three years when the Men's Soccer World Cup arrives at that sport's spiritual home in Brazil. And then once again, when a real carnival has been planned for the 2016 Summer Olympics in Rio, let's just hope the party is still going strong at that point.

http://globalpublicsquare.blogs.cnn.com/2011/07/18/is-brazils-economy-in-dang...

Category:

Sports

Tags:

• CNN
• Brazil
• Soocer
• Footbal
• Brasil
• 2016 Summer Olympics

[zmangmz]

Always is a malicious tendence news about Brazil with comments like: "You may will be surprise who wants to buy ......Yes Brazil!!!! Another one very common...." Brazils economy is growing.....Yes, you listened correct!!!!....BRAZILIAN ECONOMY IS RISING!!!!!!.........My question is. Why US media sell this kind of information? Why The population of US have wrong information about BRAZIL? What is the interest behind those malicious information? I know the answer. Do you?

[heitorardachnikoff1]

CNN=MISINFORMATION!!

[Dhaynes28]

danger of overheating? what a lie T_T

[BSBcty]

The end of Brazil's Carnival ? O.õ HAHAHAHAHAHAHA.... this is ridiculous. CNN makes me laugh heheh :)

[nickfl1980]

@radiovaral2 I understand what you mean. They don't only make me laugh, they (US mainstream news like CNN/FOX/MSNBC) they enlighten me to do my own homework since they enjoy (that sick they are) lying and give false/wrong propaganda. I don't watch those news channels that much because sometimes I get bored with their cheap lies and very sometimes they do tell the truth, but you noticed that when it's a subject about nothing.

[radiovaral2]

@nickfl1980 I like to watch CNN because their news are so terribly wrong about geography that makes me laugh a lot.

[nickfl1980]

What people need to understand is how this indian from India thinks and why he thinks like that: In his (Zakarian) head, if you studied in the US at one of those ivy league universities, you know it all and understand that people who listen to him (without being able to think for themself) will take him "literally" serious and not question him to much. The more people think like mr Zakaria, the more zombies (followers) you will have who refuse to do their own REAL homework /research.

[radiovaral]

@zmangmz Americans think that brazzzilians are hanibbals that live inside a ugly favela inside the Amazon forest, always surviving to mudslides with soccer martial art, singing very loud: La Cucaracha, La Cucaracha Ay ay ay ay!!!

[radiovaral]

AMERICANS think that Brazil is a communist island in Africa, with everybody playing soccer and speaking spanish inside a ugly favela... They can do it, because americans are completely misinformed about anything that is happening around the world.

But a INDIAN thinking like that, you must be joking...

[radiovaral]

CORINTHIANS IS BIGGER THAN CNN!!

[radiovaral]

Zakaria...