Finance Minister Fernando Haddad said on Thursday (12) that Brazil is experiencing a “best of all possible worlds” because it has a historically low unemployment rate and low inflation, but he acknowledges that there is still pessimism in part of the financial market. For Haddad, part of this pessimism is speculation.
“We grew in three months what the market projected for the entire year. I understand that there are speculators who profit from this, we cannot disregard speculation. There are people who profit from this type of talk, but there are people who make mistakes too. There are people who make mistakes in their forecasts, and in good faith,” Haddad commented during an interview with Good morning Ministerprogram of the Gov Channelfrom the Brazilian Communications Company (EBC).
Brasília (DF) 09/12/2024 Finance Minister Fernando Haddad participates in the program Bom Dia, Ministro, presented by Karine Melo Photo: Fabio Rodrigues-Pozzebom/ Brazil Agency
Minister Fernando Haddad said that there is a contradiction in the financial market, which has been celebrating Argentina’s results, which recorded a GDP drop of -5.1% in the first quarter of the year, while still criticizing Brazil’s figures.
“When I talk to Argentine businesspeople, they are optimistic that the country is collapsing. The recession in Argentina is brutal, poverty has reached 50% in Argentina. And when you talk to someone in the financial market here in Brazil, you see exactly the opposite. They say that everything is going wrong. Now, the catastrophic predictions are not happening,” Haddad added.
Node 2nd quarter of 2024, the country’s GDP grew by 1.4% compared to the previous quarter, exceeding the expectations of the financial market. unemployment closed June at 7.1%lowest rate for the quarter since 2014.
Meanwhile, the Broad Consumer Price Index (IPCA) registered deflation in August, with a reduction of 0.02%driven by the fall in food prices (-0.44%). In the last 12 months, the IPCA is at 4.24%.
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Despite these numbers, the financial market predicts that the Central Bank should increase interest rates by 0.25 percentage points next week, when the Monetary Policy Council (Copom) meets. In the latest minutes, Copom cited the expected increase in public spending as one of the reasons for a possible increase in interest rates.
Currently, the Brazilian basic interest rate is 10.5% per year. This is the third highest real interest rate in the world, behind only Turkey and Russia, which is at war, according to a survey by MoneYou of July.
Regarding public spending, Haddad commented on the difficulties he faced from the previous government, which transferred the expenses with court orders to the current administration. “If it weren’t for the obligation to pay the default on court orders, we would have reached a deficit close to that projected by the government to pay for the expenses contracted and not foreseen in the budget received from the previous government,” he stated.
Overall, Haddad was optimistic about Brazil’s results, but he considered that there are still challenges for the sustainable development cycle. “Brazil can experience a sustainable growth cycle. That’s my opinion. Are you hired? No. We are moving forward, we are advancing. We are advancing, even surprisingly for many, but there is a lot to do,” he added.
