The lack of direction of the economic agenda will continue till the 2022 elections. Ultimately, what matters most is to be reelected and not necessarily follow through on commitments that improve the recovery and growth of the country’s economy.
In his remarks at the end of the week, Economy Minister Paulo Guedes said the fundamentals of the Brazilian economy had not changed, having found the formula to finance the new Bolsa Família, although he acknowledged receiving a low score. I like it. The financial aspect in the exchange service for the most delicate.
The fact remains that the government would even disregard spending limits to finance the more robust Auxilio Brasil.
The week ended with a high of 3.115% amid worrying financial news from recent days.
A more proactive fiscal policy would demand a tighter monetary policy, making the economic scenario more challenging, with higher, weaker growth, higher gross debt and higher.
An imbalanced public budget generates inflation and the dribble is pedaled to the extent of spending.
Since September 7, an accumulated appreciation of 10% over real, meaning food inflation is more likely to be under pressure. The dollar puts pressure on grain prices, eg, and, which contaminate derivatives such as pasta and baked goods, as well as the meat of animals dependent on feed, poultry and pork. The water crisis was already helping to drive up the cost of these foods, which initially became more expensive in bulk, but readjustments have already reached the retail level.
Technically, the dollar should be the interest rate differential between Brazil and the United States, but as political risk is intense, economic agents are even more stressed.
The bottom line is that there is no magic to gain popularity in government. It is necessary to spend. Fiscal risk reverses our growth projections, affecting exchange rates, fuel inflation and interest rates.
