Teaching Note | HBS Case Collection | June 2013

Brazil's Enigma: Sustaining Long-Term Growth & Currency Wars

by Laura Alfaro and Hilary White


Over the past decade, Brazil's future as a leading world economic power appeared certain. An expanding middle class and commodity boom had fueled economic growth, with GDP growth hitting a peak of 7.5% in 2010. However, the high cost of conducting business in Brazil, known as "Custo Brasil," was hurting domestic manufacturing, while incoming foreign investments threatened to overwhelm Brazilian markets. Under President Dilma Rousseff, economic growth stagnated, and the Rousseff administration struggled to find the best balance between reducing inflation, maintaining a flexible exchange rate, and improving the competitiveness of Brazilian exports.

Keywords: exchange rate; inflation; inflation targeting; industrialization; infrastructure; currency; capital controls; stimulus; commodity prices; manufacturing costs; globalization; productivity growth; Economics; Economic Slowdown and Stagnation; Inflation and Deflation; Macroeconomics; Public Sector; Brazil; South America; Latin America;


Alfaro, Laura, and Hilary White. "Brazil's Enigma: Sustaining Long-Term Growth & Currency Wars." Harvard Business School Teaching Note 713-092, June 2013.