The OECD has just released its official Economic Survey report on Brazil. Here are the highlights:
– Brazil’s economy is set togrow less than 4 percent annually in the next two years
– Fiscal reforms are neededto ensure long-term growth
– Careful attention must be paidto inflation
– Foremost challenge: curbing inflation (currently at 7.31%) without excessive reliance on monetary policy or capital controls
– Advice to combat inflation: Brazil should put more effort into fiscalconsolidation, and continue to and amplifying policies currentlyin place, such as spending cuts and the setting of primarybudget surplus targets.
– Attempts to offset the BRL appreciation would only contribute toinflation, hampering necessary economic adjustment and invitingfurther capital inflows.
– Fiscal consolidation is the best way toreduce pressure on the real
– Sound policies have helped Brazil face the globalfinancial crisis, but even more notable is the unprecedentedsocial progress it has realized, including a reduction inpoverty and inequality
– Negatives for Brazil: international economic uncertainty, cross-country interdependence (in our own words: CHINA!), rapid population aging, and agreater reliance on oil (in our own words: Petrobras to sustain the spending bonanza!)
Full report can be downloaded below (Source: OECD).