The Institute of International Finance (IIF) evaluated, in a report released this Tuesday (19), that Brazil and other emerging countries are experiencing stagflation, a process characterized by high inflation and stagnation of activity, with prices suffering the impact of supply shocks.
The document highlights that, in Brazil, activity had not recovered from previous recessions when the economy was hit by the coronavirus pandemic. The study pointed to Mexico as a similar case and indicated that India and Indonesia also fit into this scenario, but to a lesser extent.
According to the IIF, high inflation coexists with an incomplete economic recovery in several emerging countries, where production levels are well below pre-pandemic levels.
The impact of Covid-19 on supply chains, which have not yet been normalized, and rising food and energy prices, which may not relent depending on the effects of conflicts in Ukraine, are the main factors behind the drop in energy. offer, according to the institution.
“We conclude that inflation in emerging markets is driven by a series of large supply shocks. Economic activity is too weak to be the main driver of price pressures. If these shocks subside at some point, emerging market inflation could cool faster than expected,” said Sergi Lanau and Jonathan Fortun, economists who signed the report.
Source: CNN Brasil
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