MercoPress. South Atlantic News Agency
Brazilian economy “highly dependent on external financing and current account deficit”
The Brazilian economy may face a potential crisis as its fragile foundation could barely withstand the impact of a new global financial turmoil, a local economist warned. Read full article
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Disclaimer & comment rulesReinaldo Goncalves, economics professor at Rio de Janeiro Federal University seems to have made a powerful case.
Aug 12th, 2011 - 12:24 pm - Link - Report abuse 0Until Forgetit tells me the professor is a bufoon and all is robust with the brasilian model, I shall fear for collapse in Brasil's position.
Don't know where he took his 1.4 dollars figure from, but according to the Central Bank, external debt, both private and public, stood at 351 billion dollars in June (or 15% of GDP), with net external debt being at -72 billion dollars. That is, assets surpass liabilities by over 70 billion dollars. External vulnerability, as I have said before, is accounted by the current account deficit; that leaves the country dependent on foreign investment, which, in the event of capital flight, will result in currency crisis.
Aug 12th, 2011 - 12:29 pm - Link - Report abuse 0Look at you Geoff, getting all hot for the socialist professor. But there you have it above. By the way, have I ever said the current model is a good one? Have you missed all of the 100 times I have complained about the government's failure to devalue the currency and reduce interest rates? Nah, these things it is usually the right-wing and the media you consume - e.g., Veja - who defend: that the government needs to stay away from the financial markets so as to not displease foreign “investors” (lisez: speculator), and keep inflation under control by increasing the rates. The professor is right about the currency; he's wrong about the debt.
Aug 12th, 2011 - 12:35 pm - Link - Report abuse 0[] - 2 F87
Aug 12th, 2011 - 01:51 pm - Link - Report abuse 0351,941 millions $ was Dec/2010 total external debts .
378,092 millions $ at March/2011 total external debts !
I'm having trouble squaring your nett $R-71bn with the prof's nett $R+660bn.
Aug 12th, 2011 - 04:54 pm - Link - Report abuse 0. . . and even more trouble mapping that on to geo#4's $R+0.37bn!
My head hurts!
@geo
Aug 12th, 2011 - 06:40 pm - Link - Report abuse 0I stand corrected, you're right.
@Geoff
Table 5.10 in page 7. http://www.bcb.gov.br/htms/relinf/port/2011/06/ri201106c5p.pdf
Perhaps what the professor means by “external liability” is not external debt alone (in which case he'd be wrong); it is instead a combination of debt; foreign direct investment; and inflows into the stock market.
Aug 12th, 2011 - 06:43 pm - Link - Report abuse 0Commenting for this story is now closed.
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