Credit supply and recent economic growth in Brazil

The average GDP growth over the past 30 years has been lackluster in Brazil. Some analyses attribute this performance to the middle- income trap. Bresser-Pereira challenges this thesis and suggests that the adoption of neoliberal policies in the 1990s is the reason Brazil did not return to its historical growth rates after overcoming the external debt crisis of the 1980s. This article argues that, despite the unfavorable legacy of such policies, Brazil experienced a decade of robust growth from 2004 to 2013. The article points to the trajectory of overall credit supply as one explanation for the increasing GFCF to GDP and the remarkable GDP performance during those 10 years. It analyzes the counter-cyclical role of credit supplied by public banks in stabilizing credit expansion. Lastly, it highlights the contemporary characteristics of the recent decade of growth when compared to growth periods from half a century ago.