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Brazil: the most likely scenario

Brazil: the most likely scenario

There are 7 well established conditions identified by economists:

1) The bulk of Brazilian exports are primary products
2) It would be necessary to add items with higher added value to make it more robust
3) The "Brazil cost" is an obstacle that makes it difficult to compete for items with higher added value
4) State debt (100% GDP by the end of 2020) is one of the largest among emerging countries
5) Unemployment, the budget deficit, the expensive and inefficient State machine is a giant burden
6) The impossibility of increasing taxes to balance the State
7) The lack of capacity of the 3 Powers to reduce the size of the State

The best and most difficult, too, would be to reduce the Brazilian State. But, of course, there is no will, determination, ability, leadership and honesty for this much needed turnaround..

I venture to infer that the natural exit will be a strong devaluation of the Real.

In this scenario, the country would be cheaper (for international buyers of Brazilian products), automatically our people would be "encouraged" to buy more "made in Brazil" because imported products would be unviable.

And there is an irresistible component: devaluation does not depend on voting, parties, judges, the "old politics". It is the cost of our own collective disability priced by the market.

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Rafael Herzberg's picture

Thank Rafael for the Post!

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