U.S. Secretary of the Treasury Timothy Geithner visited Sao Paulo and Brasilia in early February, seeking to bolster mutual ties ahead of President Barack Obama's upcoming visit to Brazil and hoping to foster teamwork on economic issues between the two countries.
During a discussion with students at the Sao Paulo campus of Fundação Getulio Vargas, Secretary Geithner said that economic ties between the two countries are fundamentally aligned and are expanding. Investment, trade, and capital flow in both directions. Brazilian entrepreneurs are investing in the United States, opening up plants and creating jobs, just as American companies are doing in Brazil, said Secretary Geithner.
"Brazil has benefited from exceptionally capable economic leadership, which has delivered rapid growth and huge gains in living standards, bringing millions out of extreme poverty. Economic growth has been balanced, led by domestic demand, consumption and investment. For that balance to be sustainable, Brazil, like the United States, needs balance in the global economy," he said.
Brazil has experienced a surge in foreign capital investment, and an influx of goods from countries whose strictly regulated currency policies allow for cheaper exports that undercut the ability of domestic producers to compete. A recent survey of 1,529 manufacturing firms in Brazil indicated that 45 percent of them are losing business to such unfair competition.
Brazil's economic performance in the aftermath of the financial crisis serves to underscore the need for strong commitments to the rebalancing and sustainable growth objectives that world leaders have supported in a variety of economic fora, including the G20.
"Brazil and other emerging markets cannot address these challenges by their own policy choices alone. They need — just as we do — the support from the policy choices of other major economies," said Secretary Geithner.
For example, once countries with large surpluses begin to target production toward their own consumers, and strengthen their currencies with respect to the global markets, the flow of capital will become more balanced. This will help increase the growth of exports, and thus, the economies of countries with more flexible policies, such as Brazil and the United States.
"Our two economies are in a much stronger position than we were two years ago," said Secretary of the Treasury Geithner. "We are bound by shared economic challenges and common interests. And it’s now more important than ever that we work together as partners, so that our people, our businesses and our economies both drive and benefit from global economic growth."