February 13, 2009 / 4:09 PM / in 9 years

Sunny Brazilians see bright side of the crisis

BRASILIA (Reuters) - “What crisis?” Brazil’s president famously asked as financial turmoil began whipping around the world last year. Six months later, that still seems to sum up the view of many Brazilians.

Despite mounting job losses among the growing signs that the crisis could hit Latin America’s biggest economy hard, the land of Carnival, samba and soccer appears stubbornly optimistic it will emerge nearly unscathed from the crisis.

President Luiz Inacio Lula da Silva, a former factory worker, has taken the lead.

“Brazil today is the country that is best placed to come out of this crisis,” he said this week.

With his party facing a general election next year, Lula could be expected to stay upbeat. But he is not alone.

An opinion poll this month showed a majority of Brazilians expect their economy to recover shortly, with around 51 percent betting employment and salaries will improve over the next six months, up from around 47 percent in December.

Car sales in January grew for the second consecutive month indicating consumer confidence.

Chocolate makers say they are producing a record number of Easter Eggs in anticipation of stellar demand this year, and bustling shopping malls in major cities are a far cry from the consumer gloom in Europe or the United States.

Stock market investors bet that Sao Paulo’s Bovespa index will rise 12 percent by August, the futures market shows.

This optimism flies in the face of daily layoffs. Economists forecast that growth this year will slow to around 2 percent from over 5 percent last year and some predict a recession, pointing to slumping global demand for the commodities that helped fuel Brazil’s recent boom.

NATURAL OPTIMISTS?

One explanation for the upbeat outlook is that Brazilians are natural optimists.

“It’s a cultural thing, a mix between a positive world view and indifference -- ‘it’s all in God’s hands anyway so let’s have fun’,” says political scientist Jose Luciano Dias.

The military which ruled Brazil from 1964 to 1985 reinforced the idea of “Brazil -- the country of the future”, said Diaz. Two decades of propaganda convinced many they were unique in the world.

Others note that the crisis has not hit Brazil hard yet. The country is less exposed to the global economy than many others. Trade makes up only 22 percent of gross domestic product, compared to nearly twice that in Mexico.

The liquidity crunch has also been less severe than elsewhere because consumer credit, while expanding rapidly in recent years, is still relatively unused.

Unemployment is rising only gradually and banks are relatively solid -- two important psychological crutches.

“We entered the crisis later,” said Roberto Piscitelli, finance professor at the University of Brasilia. “That probably means the crisis will be less severe but it could also mean it will last longer here.”

A third reason for Brazil’s optimism is that the country experienced nearly a quarter of a century of economic crises with vicious boom-bust cycles and high inflation.

That made managers less susceptible to doom-and-gloom predictions, said Gesner de Oliveira, an economics professor and head of the Sao Paulo water company Sabesp.

It also means consumers want to hold on to the relative economic stability they enjoyed since 2003. Since then, about 15 million people have bought their first refrigerator or car.

“In those five years, Brazil had everything going for it, there’s resistance accepting it could be over,” said Oliveira.

Editing by Stuart Grudgings and Alan Elsner

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