“Brazil is a prisoner of a zero-growth trap,” says Guedes

Economy Minister Paulo Guedes said at an event of the CNI (National Confederation of Industry), this Tuesday (7), that Brazil will have a slowdown in the economy, but will not go into recession.

“We have to resist the skepticism of the losers in the previous elections and react with reality: inflation is rising, but it is a problem for the whole world,” said Guedes. “The BC is raising interest rates and this slows down growth, but it does not cause recession, as the investment rate is reaching 20%, the peak since 2014,” he added.

Guedes called “small talk” the criticism he received in recent weeks about the fiscal risks posed by the government’s new social program, Auxílio Brasil. “A lot is said about the lack of fiscal control, irresponsibility, fiscal populism… small talk, false narrative”, he affirmed.

“The truth is that we ended up with a deficit of 2% of GDP and in the first year we pulled it to 1%. the disease arrived [coronavírus] and we went to a deficit of 10.5%, but this year we closed the deficit at 1% of GDP. No country in the world has done this,” he said,

During the event, the minister criticized previous administrations, stating that Brazil is “prisoner of a zero-growth trap” and stressed that the country has the capacity to be the greatest agro-industrial power in the world.

The economist also mentioned the reforms, promises made by the current government during the electoral campaign, which are stalled in Congress. “The reforms are there. Whoever asks for administrative and tax reforms… everything is there, all you have to do is approve. It’s not just PEC 110, there’s also the income tax”, he said.

“In the first year, we started with the big pension reform. We didn’t complete it, we wanted to do more, put in a capitalization system with guaranteed savings. Brazil would already be ensuring higher investment rates and future growth. They let us do it only halfway,” he continued.