Brazil is doing a China-lite. The global slowdown has hit Latin America’s biggest economy hard. Growth has fallen from 7.5 per cent just two years ago to less than 2 per cent now. To stop things getting even worse, President Dilma Rousseff has unveiled several stimulus packages this year. The latest is an investment programme, with the first phase announced this week. This will see $66bn of private concessions granted to build new roads and railways. Finance will also be provided, Chinese-style, by Brazil’s state development bank.

Although Brazil’s initiative is a fraction of the size of China’s – the $630bn stimulus Beijing unleashed in 2008 was, proportionately, five times bigger – Brazil has more obvious infrastructure needs. Thus this is neither a Chinese case of building workers’ ghost towns, nor of massive rises in state debts. It is also a necessary change in Brazil’s policy mix, which had favoured consumption over investment.

For much of the past decade, Brazil surfed the commodities boom. This gave former President Luiz Inácio Lula da Silva an easy political ride. But it also meant important, if tricky, investment and structural reforms were shelved. Now the easy times have ended. Currently, most Brazilian growth is concentrated in services. This accounts for 60 per cent of the economy, but suffers from very poor productivity. At the same time, fierce foreign competition has compressed manufacturing margins, which has led companies to cut investment. With the wheels falling off the old model, Brazil had to change tack. Higher investment that unblocked transport bottlenecks and boosted productivity was the clear answer.