Brazil : Coping With a Double Whammy
Brazil’s economy is currently undergoing the effects of a double whammy.
On the macroeconomic policy front, fiscal adjustment is being implemented in tandem with a double realignment of relative prices. On the microeconomic side, a corruption scandal around procurement of the state-controlled oil company (Petrobras) has underwhelmed some major national companies, leading to a downscaling of private and public investment outlays.
GDP is expected to contract by more than 1% in 2015 and current 12-month inflation rates – close to 9% – are forecast to slowly converge toward the target center (4.5%) along 2016-17. Prospects of a future economic recovery stem from a three-pronged growth agenda outlined by the government.
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Brazil : Coping With a Double Whammy
