Brazil lectures EU on economic crisis: Austerity “not enough”

The European Union and the rest of the developed world cannot hope to climb out of their economic woes by relying on austerity alone, Brazilian President Dilma Rousseff said Tuesday after a summit with the bloc.

Rousseff, a long-time left-wing activist trained in economics, leads a country whose gross domestic product is expected by the International Monetary Fund (IMF) to grow by 3.8 per cent in 2011, compared to the EU’s 1.6 per cent.

‘The world today sees the current state of affairs in developed countries with great concern,’ she said, referring to the debt crisis that is pushing the EU and United States to slash government spending.

‘Once again we face a recessive scenario marked by high unemployment and a deterioration of historic social achievements,’ Rousseff said, after meeting EU President Herman Van Rompuy and European Commission President Jose Manuel Barroso in Brussels.

‘History shows us that we will only be able to exit the crisis through economic stimuli, coupled with stable macroeconomic policies as well as social policies aimed at creating jobs and income. Simply adopting recessive fiscal adjustments is not enough,’ she warned.

Speaking as Greek protesters were blockading government buildings over the latest cuts imposed by EU and IMF bailout lenders, Rousseff called for growth-promoting policies to ‘ensure that people do not lose their hope in the future.’

She said, ‘Only by stimulating economic growth it is possible to generate the resources needed to pay the debt and achieve balanced public accounts.’

Brazil and other emerging countries have shown that growth, job creation, boosting incomes and productivity are compatible with fiscal responsibility, she said.

Rousseff and counterparts from fellow BRICS countries – Russia, India, China and South Africa – are expected to meet EU leaders again at the summit of the Group of 20 (G20) major economies in Cannes, France, on November 3-4.

Van Rompuy said he conveyed to Rousseff ‘the EU’s determination to maintain the stability of the euro area and to stimulate structured economic growth and productivity.’

He urged ‘strong and coordinated’ international action ‘to avoid the global economy falling back into recession.’