China's slowdown hinders Brazil's recovery
President Dilma Rousseff received China's Vice Premier Wang Yang in June last year 
The first week of 2016 began turbulent for the financial market, because the slowdown of the Chinese economy drop-kicked stock markets across the world. Major exporter of minerals and grains for the Chinese market, Brazil has been squarely hit by instabilities in the world's second largest economy.
The commercial dollar closed the first week of 2016 up 2.34% in Brazil. The São Paulo-based stock exchange BM&F Bovespa plummeted more than 6% in the last five sessions and reached the lowest rate since March 2009, at the height of the US financial crisis. According to economists, China's slowdown further complicates Brazil's situation to emerge from its worst recession in 25 years.
For the economist, Róridan Duarte, member of the Federal Economic Council, the newest international crisis reached the country at the worst moment. "The size of China's economy, with GDP [gross domestic product] of nearly $10 trillion, turns any sneeze into a flu worldwide. A country that grows 7% instead of 10% gives a fantastic performance, but the slowdown creates impacts everywhere in the planet," he reported.
According to him, Brazil has become dependent on the Chinese economy when China started to invest in infrastructure and buy more Brazilian commodities—primary goods with international prices. With the slowdown, the Asian giant has decreased these goods' consumption, making their prices plummet. "Unlike the 2003 crisis, Brazil cannot use exports to recover faster, because the global demand for Brazilian products dropped," he said.
For Duarte, Brazil's great challenge will be to take advantage of the devaluation of the real to diversify the export basket and sell more manufactured products. "The problem is that it will take some time because the country went through a deindustrialization process in the past few years, and the industry recovery is not immediate," he explained.
On the other hand, Virene Matesco, professor of economics, says Brazil's main problems are internal and the recovery of the Brazilian economy depends more on the ability of the country to overcome the political crisis and implement the fiscal adjustment than on China's performance. "Of course that what happens in China, our main trading partner, interferes in Brazil. But the Brazilian recession was caused by a fiscal crisis worsened by a political crisis. The international scenario is a secondary factor," she noted.
According Matesco, Brazil's biggest challenge will be for new Finance Minister Nelson Barbosa to regain the government's credibility with investors. "He has to show if he is really committed to fiscal adjustment, because in previous years he was the mastermind of many increased spending policies that did not work and had not increased investments," she said.
Translated by Amarílis Anchieta
Fonte: China's slowdown hinders Brazil's recovery
