In Davos, Guedes says there is room to expand policies against Covid wave

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By participating in Davos World Economic Forum This Friday morning (21) the Minister of Economy, Paulo Guedes, said that there is fiscal and monetary space in Brazil to expand social assistance and credit policies in the event of a “third or fourth wave” of Covid-19.

Guedes acknowledged that the Ômicron variant is infecting Brazilians at the beginning of the year, but, for him, in a “less severe” way. “We are ready with the protocol,” he said, referring to a possible worsening of the pandemic.

“We are ready to shoot [as ações econômicas] again. All programs were very successful: job preservation, credit programs and direct transfers. So we are ready for mass vaccination.”

In a speech in which he tried to show a better fiscal performance of Brazil compared to other countries in the world after the first impacts of the pandemic, Guedes argued that Brazil was “probably the only one” to withdraw expansionist policies with the decline of the disease and the resumption of the pandemic. economy in 2021.

Thus, this favors a response similar to that given in 2020 and 2021 in the event of a resurgence of the disease.

The minister, who was the last to speak at the event, began his speech by saying that the economic shocks due to the pandemic were similar around the world, but that the responses of each country were different.

Brazil, according to him, is the only country that is, from a fiscal point of view, at the same level as it was before the pandemic, at the beginning of 2020.

The actions of the federal government, in his view, were successful in maintaining employment, income and digitization of Brazilians.

In monetary policy, Guedes highlighted that the real interest rate is at 3% or 4%. He also repeated that public spending as a proportion of GDP returned to the same level as in 2019 (19%), after reaching 26.5% in 2020.

“All of our expansionist policies were aimed at the disease, we did not make them permanent”, said the minister.

His speech lasted just over ten minutes. Guedes also praised that Brazilians have adhered to vaccination, which would be favoring “the safe return to work” and economic recovery.

In addition to Guedes, the president of the European Central Bank (ECB), Christine Lagarde, the president of the Bank of Japan, Kuroda Haruhiko, the managing director of the International Monetary Fund (IMF), Kristalina Georgieva and the Minister of Finance of the Indonesia, Mulyani Indrawati.

Inflation

Guedes repeated at the World Economic Forum in Davos that inflation will not be transitory and is not an exclusive problem for Brazil, but for everyone.

For him, bottlenecks in production chains should dissipate, but the West will no longer benefit from the effect of globalization, which has increased competition in the labor market and thus kept wages lower.

According to the minister, central banks are sleeping and inflation will be a “big problem for the Western world”. But Brazil, he said, moved quickly to deal with inflation through the Central Bank.

Reference: CNN Brasil

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