MercoPress, en Español

Montevideo, December 8th 2022 - 07:26 UTC

 

 

Brazil denies any 'stagflation' and forecasts economy with 'reasonable' growth level in 2015

Wednesday, August 6th 2014 - 07:57 UTC
Full article 4 comments
According to Tombini, the government is ensuring financial stability, “known as macro-prudential measures.” According to Tombini, the government is ensuring financial stability, “known as macro-prudential measures.”
“We have a more favorable outlook and see quicker growth in the second half of the year, although 2014 will be a sort of transition year”, said Mantega “We have a more favorable outlook and see quicker growth in the second half of the year, although 2014 will be a sort of transition year”, said Mantega

Brazil is far from stagflation, central bank chief Alexandre Tombini said on Tuesday, forecasting the economy will pick up speed and inflation will ease in coming months. In similar terms Economy minister Guido Mantega said the economy should pick up in the second half of the year after a slow start and hit more “reasonable” growth levels in 2015.

“We certainly cannot speak of a crisis,” Tombini told lawmakers at the Senate's economic affairs committee. “I want inflation to be lower than it is now, but it remains under control.”

Tombini's remarks are at odds with the view of some economists and investors, who have noted recently that inflation is running above the central bank's target range and economic growth has ground to a near halt.

President Dilma Rousseff's main contender in the October presidential election, Senator Aecio Neves, has recently described this outlook as one of “stagflation”.

In Tombini's view, monetary policy is helping control inflation pressures, which should fade over the next year. He also said economic growth will recover in the second half of this year. Tombini did not speak of possible rate hikes, but he reiterated that the bank is not considering reducing its benchmark Selic interest rate in the near future from its current 11%.

Tombini also said there is no contradiction between high interest rates and the recent measures that injected up to 20 billion dollars in credit into the country's ailing economy.

The credit stimulus, aimed at ensuring financial stability, is known as “macro-prudential measures.” When risks to the banking sector subside, the central bank may allow more credit to flow into the economy, Tombini said.

Likewise Mantega discarded recent criticism. “We have a more favorable outlook and see quicker growth in the second half of the year, although 2014 will be a sort of transition year for us and for everyone in the world, we believe that we have the conditions to grow more next year.”

Mantega anticipated that the recovery ahead would be gradual and that the Brazilian economy will not immediately see the 4% annual growth rates that made it a Wall Street darling in the past decade.

Prices in Brazil have eased on a monthly basis since March, but 12-month inflation rose to the 6.5% ceiling of the government official target in June. The government's inflation target is the middle of a 2.5 to 6.5% tolerance band.

Mantega, who declined to confirm whether he will stay on after eight years in the job if Rousseff is re-elected, ruled out any sharp increases in the price of electricity and fuel next year as inflation pressures subside.

But he signaled that authorities could hike fuel prices later this year. Brazil has not yet raised gasoline prices in 2014.

“Every year we adjust fuel prices ... that's the rule,” he said when asked if fuel prices could be raised this year.

The market expects the government to increase energy prices next year after keeping them artificially low for more than a year, stoking already high inflation.

Many economists also say the Brazilian economy may have fallen into recession after a likely contraction in the second quarter and a possible downward revision in first quarter growth numbers. But Mantega was emphatic, “there is no recession, no stagflation” and added “the use of these terms is an exaggeration.”
 

Categories: Economy, Politics, Brazil.

Top Comments

Disclaimer & comment rules
  • 313toBioBio

    I think there's a conspiracy with emerging markets. There was a contagion in 2001 and it nailed Brazil and Argentina together....theyve integrated as countries since then which makes it a worse problem today....This vultures Vs. Argentina argument is covering the deliberate sabotage and reckless policies of the Kirchners. They are the regime of opposites. She acts like a left wing element of the catholic population..but actually has no catholicism in her family tree ( her mom goes to temple)..same thing with Nestor. And look who she appoints, Kiciloff, Timerman...Timerman lived in exile in Israel before...while he complains about gazans now. May 25th Cristina says her regime is like Jesus breaking the rules and washing feet. She unveils the evita peso while she destroys its purchasing power....She becomes godmother to a chile of 2 lesbians...everything she does is a parody against the nazi sympathizing corrupt institutions that persecuted people like Her, Nestor, and Kiciloff in the past. I think her scowly voice is to ridicule the 28 or so old Evita who spoke like that. It was probably cute in the day, but for many Jews, this woman wore jewels pilfered from people that suffered...while peron stages swastica parades. Calling Kicillof and her lefists or socialists makes believe that they actually want to help poor people or any Argentine. It's also troubling that down here there is a propaganda that all Jewish people support zionism...and the bizarre religious ceremonies and political speeches of Madonna that went from Israel to Brazil to Argentina in 2012. She offered to stabilize the world with a love for Obama and her name on a cross.

    Aug 06th, 2014 - 04:56 pm 0
  • yankeeboy

    There Are None So Blind As Those Who Will Not See

    Told ya this was going to happen
    Marxist Monkeys don't know any better
    Dole of free money to the poor and watch inflation skyrocket.
    How much does someone want to bet they increase subsidies to goose consumption....right before the election

    Aug 06th, 2014 - 05:23 pm 0
  • Jack Bauer

    @1, “How much does someone want to bet they increase subsidies to goose consumption....right before the election”....
    Dilma already has....about a couple of months before the World Cup, in a gesture to try to offset widespread criticism of her management of the country, and in order to guarantee her voter base, she simply signed off on an increase of the 'Bolsa Familia' of 10 %...just like that....
    She can try all the gimmicks in the book, but the intentions behind her her actions are so obvious, they stink....while she increased the “Bolsa Familia” by 10 %, to favour 30 million voters (totally improductive), in the same breath (pretty rotten, I'm sure), she tells the 17 million State pensioners (productive, and who contributed to the system for at least 30 years), that THEY only got a 6% raise, because the government can't afford anything higher...

    Aug 06th, 2014 - 05:51 pm 0
Read all comments

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!