Bleak short-term economic outlook raises the risk that social and environmental achievements may not be sustained. The changed economic circumstances have exposed shortcomings in Brazil's development model, epitomized by the struggle to achieve a sustainable fiscal policy. Against this background, some Brazilians are now asking whether the gains of the past decade might have been an illusion, created by the commodity boom, but unsustainable in today's less forgiving international environment. Brazil thus finds itself at an important juncture and, to a certain extent, the policy course set today will determine whether the country can sustain the gains of the past and return to a path of solid, inclusive and environmentally sustainable growth. This Systematic Country Diagnostic offers a contribution to the debate about Brazil's future development.