Insper professor of international economics Roberto Dumas declared, in an interview with CNN that the car and footwear sectors in Brazil are likely to suffer from the economic crisis in Argentina.
The Latin American country suffers from inflation hitting almost 70% and with approximately 40% of Argentines living below the poverty level, in addition to an interest rate at 52%, its highest level since 2019.
“Fortunately, Brazil is not as connected with Argentina as it was in the past”, says the expert. “But some sectors [ainda] must suffer”.
Among Dumas’ concerns is Argentina’s new economy minister, Silvina Batakis, who may place some restrictions on capital outflows from the country.
It is worth noting that she is known for being an ally of Cristina Kirchner, who has always defended currency issuance and eventually price fixing.
Before Silvina took over, a measure was decided so that all imports of shoes from abroad, mainly from Brazil, would have a payment term of 180 days.
The professor also stated that the country is experiencing “exactly what we (Brazilians) experienced before the real plan”. Since the issuance of the monetary base in twelve months was 45%.
“And there is no point in using much more interest cash to control [os preços]. If inflation hits 70% and goes to 80% or 90%, it’s innocuous [subir] the interest rate to 120%.
So, for Dumas, Argentina will need an unorthodox plan, changing its currency – which today is the peso, “similar to what we did in the real plan”. In other words, make an exchange rate anchor to address the problem of inflation, similar to the Real Value Unit (URV).
“That would be the only way out for now”, says the professor. “If it gets worse, they should follow as happened with Ecuador, a dollarization of the economy”.
“Let’s see what the next president will do. But if he remains a Peronist, they will hardly come out of the crisis”. The next election in Argentina is scheduled for 2023.
* Under supervision of Ludmila Candal
Source: CNN Brasil
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