The appreciation of the Real (BRL) against the Dollar (USD) is the result of the perception of global investors that there are more attractive investment opportunities in Brazil than in the rest of the world, and not due to a “currency war”, according to Paul Krugman, a 2008 Nobel Prize in Economics. ”Shouting at the developed countries central bankers will not solve it, they have more things to worry about,” said Krugman, mentioning pressures that the Fed chairman Ben Bernanke now faces to stimulate the U.S. economy.

For Krugman, Brazil’s growth is not too impressive and the country is involved in a wave of optimism that should not be attributed to its own economic performance, but to the weak economic progress in the rest of the world, said the economist, who on Wednesday attended the “International Seminar for Small Business “, sponsored by Sebrae (Support Agency for Brazilian Micro and Small Enterprises) and Valor.

Although he considers the Real overvalued, Krugman estimates that Brazil will continue to be the destination of capital flows in the long run, “which is uncomfortable for a country that is trying to promote its manufacturing industry. The strong Real was the last thing that Brazil needed,” he said.

In addition to the monetary policy in developed countries, Krugman attributed the appreciation of the Real against the Dollar to the behavior of commodity prices, which remain in an uptrend because of demand from emerging countries, especially Asia.

The economist, however, says that appreciation of the Real is a problem that can be partly addressed by the imposition of taxes and limits to discourage the inflow of capital into the country. ”If there is no threat of inflation, there is still further possibilities to cut interest rates,” he said.

For him, however, there is no simple formula to address the problem of low growth in the industry due to currency appreciation. ”The appreciated Real and the current account deficit is a situation that can not be extended in the long term. It is an old problem and the government does what it can,” he said.

At the end of his speech, Krugman also emphasized that in the long term, the trend is that the industry generates fewer jobs as a result of the increasing automation of processes.

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7 Responses to Krugman says Brazilian Real appreciation is not due to “currency wars” and that “shouting at developed countries” will not solve it

  1. gringo nao sabe nada says:

    Quem da assesoria da Dilma estava na apresentacao? Eles vao ouvir so o que querem. Mas o problema fiscal no Brasil continuara e o protecionismo tambem….eh uma pena que tem gente capaz e criativo na industria e nas empresas.

  2. ROSENSTEIN says:

    brazilian politicians lie all the time but have not ben able to deceive the smart paul.

  3. ROSENSTEIN says:


  4. david duarte says:

    brazillian industry is so so bad, everything here lacks quality, thanks to protectionism and the sacrifice of the consumer

  5. Karsten Hansen says:

    Brasiliens and others here.
    I am not an economist,and to some big problems in Brasil,dosnt take an economist.

    Mensalao,for starters,and the on goings show at the moment,Chachoira,Charkie Waterfall like his is known to New York Times,for seconds.
    The first has not even begone to use Dantas”Eu vou Detonar”seems to me send a chokwave through this contry.
    Like i said,i am not economist,sou trabalhador do Construcao civil,and can tell,what i see her,make chokwaves go through me,and the things i buy dosnt either seem to be of high quality!

    And i have noticed this,,,Invest in Brasil and derive 8% of the investment in a year,like in Eucalyptus plantation,cant realy not be good for Brasil,i whish all the best for Brasil(well for the hole world),i live here since my wife is Brasilian,and the most i see is problems,ill use an old song of Tommy Steele to describe one of the big ones:
    Water Water every where,but not a drop to drink,so tell me;Tell rest!So agua em Plastic,entendeo???Tiete,e gente sabe,que e alem Tiete,e todos os rios,todo lagos e Lagoas ,Hein.

    And the Deflorestaion,there aint no money or Krugmens on this planet thats gona save that one!
    Sim tem gringos que sabe,sou um deles!

  6. Karsten Hansen says:

    Two corrections!
    1.Chacoeira=2.Charlie Waterfall,then its set right,at the C.P.I!

  7. Sudaca says:

    Huelo complejo de inferioridad? O es que prefieres negar lo obvio?

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