Three Perspectives on Brazilian Growth Pessimism
It has become increasingly evident over the last two years that the growth engine of the Brazilian economy has run out of steam. Despite relative resilience during the global financial crisis and following a quick recovery, economic growth registered just 1 percent in 2012 and a meager 2.5 percent in 2013. More recently, the economy ... Read more
Inflation Expectations in Brazil
In order to reanchor expectations, the elected president will have to prioritize inflation’s return to its target. In its latest poll among economic analysts, the Brazilian Central Bank (BCB) computed the median of inflation expectations for 2014 above 6.5%, the ceiling of the band around the inflation target (4.5%). This has heated the debate about ... Read more
Chicken or Turtle? Brazil’s Disappointing Growth
In my recent seminars at US universities, Brazil’s disappointing growth in the last three years (2.7% in 2011, 1.0% in 2012 and 2.3% in 2013) have often been a surprise to many. Apparently, the good years of 2003-2010, in which Brazil grew an average of 4% per year, created the idea that Brazil was not ... Read more
Brazil: Exchange Rate Policy
The Brazilian Central Bank cannot aim at placing a floor for the depreciation of the real. The announcement, on May 22, that QE3 would be gradually tapered in the future led to a turmoil in international financial markets, as investors turned back to developed economies’ assets, giving way to a significant depreciation of the emerging ... Read more