June 26, 2022
An editorial in Folha de São Paulo says that Brazil is already close to stagflation

An editorial in Folha de São Paulo says that Brazil is already close to stagflation

The combination of high inflation and economic stagnation proves the failure of the neoliberal shock implemented after the 2016 coup



247 – The neoliberal shock implemented in the Brazilian economy after the 2016 coup, which promised to restore “confidence”, failed. Evidence for this is the fact that Brazil is currently facing a situation of stagflation – which is a combination of high inflation and economic stagnation. “The numbers are terrifying. The main cost-of-living index, the IPCA, rose 1.25% in October, the highest rate for the month since 2002, and accumulated 10.67% in 12 months. As services indicate greater inactivity and pollution is already forecast for 2022 – which is close to 5%, well above the 3.5% target,” notes editorial Fulha de Sao Paulo.

“The result is more difficulty for the central bank to return inflation to the set goals, and therefore interest rates should rise further. It is not excluded that the interest rate will reach 11% or more in the coming months. The picture is exacerbated by the lack of direction for economic policy. The recession appears to be It has shrunk and is already noticeable in the loss of pace even in areas that were until recently more defensive, such as retail sales. Chances for improvement depend on the economics and politics that will emerge from the elections.” The text indicates.

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