Brazil’s macro policy: are we looking at secular change or a moment of pragmatism?

Brazilian financial daily Valor Economico carried an interesting debate today (September 25) between eight leading economists on whether Brazil has thrown over its hallowed ‘tripod’ (inflation targeting; a floating exchange rate; and maintaining a primary surplus). The very fact that this is open to question highlights how much more turbid administration policies have become. It is precisely this lack of clarity that has many investors worried.

The likes of Octavio de Barros (Bradesco); Bráulio Borges (LCA Consultores) and Maurício Molan (Santander) had sharply divergent views on the fate of the tripod.  Some argued that the policies had been simply slighly adjusted to take into account the global crisis and Brazil’s vulnerability to it (Marcelo Arnosti at BB-DTVM, the asset management arm of Banco do Brasil). Others argued that the change is more profound and that the Central Bank is in a dash for growth (Juan Jensen of Tendências) with senior govenrment officials still putting unrealistic growth figures forward for next year that now have to be stiven for (Fernando Genta, MCM Consultores).

More clarity is needed from the  government on whether its economic policy has become  pragmatic or it remains firmly wedded to its long-term aims.

 

About admin

I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
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