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backLATINtalk April, 2012

Brazil workers protest over manufacturing losses

Thousands of industrial workers gathered in Sao Paulo this week to protest the loss of manufacturing jobs in Latin America’s largest country, reflecting mounting pressure to protect an economic boom seen as threatened by policies in the United States and China.

After a decade of speedy economic growth powered by selling basic commodities to Asia, Brazil has become an expensive country to live in, and the complex goods produced by well-paid workers cannot compete with cheap imports from China.

“This protest is here to scare President Dilma Rousseff,” said union leader and Congressman Paulo Pereira da Silva. “The government has to act quickly because many sectors, such as auto parts producers, are breaking down.”

The Wednesday protests came a day after the Brazilian government announced a $27-billion stimulus package to prop up sagging businesses. Most of the leaders said they supported the action taken by the left-leaning government, but they demanded more support, tax cuts and more action to reduce the value of the currency against the U.S. dollar to prop up the once-powerful industrial sector.

Over the last several months, the question of “de-industrialization” has dominated politics and economics in what is now the world’s sixth-largest economy. Manufacturing growth ground to a halt last year, slowing an economic boom that made Brazil one of the world’s most powerful emerging countries.

Brazil places the blame squarely on the United States and Europe.

Officials say that after the worldwide financial crisis -- caused by the U.S., they always point out -- the American Federal Reserve and other central banks in rich countries slashed interest rates and printed billions of dollars, amounting to an intentional depreciation of the dollar against the Brazilian currency, the real, and making Brazilian goods too expensive to sell abroad. The finance minister described this as a “currency war.”

“If you ask me what the government’s biggest concern is, I reply: to see how Brazil will defend itself from these openly protectionist policies being practiced by governments in developed countries,” Rousseff said this year, referring to the U.S. and European nations.

As the value of the dollar here has plummeted, large Brazilian cities have become more expensive than New York or London. Cars now cost several times what they would in the United States.

Industry leaders also blame China for wriggling around trade rules and “dumping” cheap goods into the country to undercut competition.

Over the last weeks, small groups of protesters have also gathered in the Brazilian capital, costumed in caricatures of Chinese dress, protesting the loss of jobs to the Asian country.

In addition to the problem of cheap dollars and cheap Asian imports, the Brazilian economy is also in some ways the victim of its own successes, some economists say, noting that the country has its own internal problems, such as bad infrastructure and high taxes that increase costs.

If no changes are made, at home or abroad, many economists expect Brazil to continue growing at a decent clip, but fear that the industrial sector could wither away.

Source: L.A. Times - GAI

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