Today, full economic recovery still a long way away in Brazil. Latest polls show President Bolsonaro shedding support. And how the Covid hearings committee turned into open war.
Up to three years for recovery, say markets
A Central Bank survey of top-rated investment firms showed a somewhat pessimistic view of Brazil’s economic outlook. For the markets, Brazil’s economy is 3.7 percent below its output potential — a gap that should narrow to 2.7 percent by year-end. However, 50 out of 75 surveyed analysts believe the gap will not be fully closed before 2023 — and 15 say the economy will underachieve until 2024 and beyond.
Why it matters. The Central Bank finds itself in a quandary. It has raised — and should continue raising — benchmark interest rates to tame inflation, but it has done so with the economy still operating well below potential.
- Market analysts’ diagnoses are in line with expectations of the Brazilian population. A recent survey showed that, for 71 percent of citizens, any economic recovery will only be seen in up to two years or more.
Inflation. Brazil’s consumer price index IPCA rose 0.31 percent in April, as predicted. However, 12-month inflation reached 6.7 percent, breaching the...