Brazil plunges into economic crisis as post-COVID recovery slows down | Business and Economic Affairs

The financial crisis comes as President Jair Bolsonaro prepares for his re-election campaign.

Brazil’s economy was in shambles because of bad weather, high interest rates, and rising prices for food aid, much to the dismay of President Jair Bolsonaro as he prepared to run for re-election.

Domestic sales fell 0.1% in the July-September period after sending a reversed decrease of 0.4% in the second quarter. Since last year, the economy has grown by 4%, the National Statistics agency said Thursday.

The downturn is reflected in the growing economic crisis in Latin America. Unemployment is up 12%, annual inflation has been on the rise for the past five years, and the central bank has launched the world’s most powerful money-cutting campaign this year. While many countries are enjoying strong growth after the coronavirus epidemic, Brazil is declining despite the lifting of anti-epidemic embargoes and increasing vaccinations.

As a result, traders turned to betting that the central bank could be too aggressive to curb inflation. The exchange rate of contracts due in January 2023, which reflects Selic benchmark expectations by the end of 2022, dropped by 22 points to 11.6% by morning.

“There is a feeling of paralysis,” said Sergio Vale, an economist at MB Associados consultancy, adding that policymakers need to be extra careful in raising interest rates in the coming months. “Wealth reached its peak in the second phase and stood there, and other sectors, such as agriculture, suffered the most.”

The largest share of agriculture in Brazil fell by 8% a quarter between drought and frost, while factories were empty. On the other hand, services and family meals grew 1.1% and 0.9%, respectively, the statistics agency said.

Brazilian crisis

Many of Brazil’s problems are unresolved: global trade unrest, climate change, and inflation are contributing to rising inflation, leading to higher borrowing.

Traders are betting on a fixed interest rate of at least 150 points at next week’s parliamentary session, which could take Selic up 9.25%. Too much GDP could cause the central bank to resent what has been happening in recent months, according to William Jackson, an economist at Capital Economics.

“As the economy grows, as trade grows, as well as the risks from the new Omicron model, the risk of expectations for next year’s GDP growth of 1.3% is severely compromised,” Jackson said in a statement on Thursday.

Another part of financial pain is making it your own. Proponents of her case have been working to make the actual transcript of this statement available online. Such concerns have caused the real estate to lose almost 8% of its value against the dollar this year despite interest rates rising.

Researchers surveyed by the central bank have slashed their GDP estimates over the past two months as questions about Brazil’s economic growth. He now expects economic growth to slow to 0.6% next year from 4.8% in 2021.