IBRE assesses Brazilian scenario with US economic recovery

Institutional
03 July 2013

For the researcher in the Applied Economics area of FGV's Brazilian Institute of Economics (IBRE), Silvia Matos, the U.S. economic recovery may be negative for Brazil - especially concerning interest rates.  In our view, in this more adverse scenario, it is more complicated to convince investors. And Brazil is a country of low savings. We really need foreign money to complete our investments, explained Silvia.  She also points out that investors now have more options, and competition will be fierce. Why make a risky investment in Brazil? There are other countries that want this foreign money. And it is much safer, for example, to invest in American bonds, she says.  Silvia further recalls that the gaps in the country include investments in infrastructure and highlights that it's not possible to know how long the country will be able to push forward the economic policy of avoiding foreign capital.  It's necessary to have a more friendly speech toward foreign money, but it is difficult for a government that shows it needs very little of this resource, and has been placed in this debate as omnipresent and omnipotent, in order to control the whole economy, concludes Silvia.