For Guedes, global turmoil is an opportunity for Brazil

The mood at the World Economic Forum’s annual meeting, with the war in Ukraine and rising inflation, is dismal. Minister Paulo Guedes (Economy), however, is optimistic about Brazil’s position in the crisis.

The country, in his view, is not very connected to the supply chain that suffers bumps around the world and still has the advantage of being a major exporter of commodities, amid the risks of food and energy insecurity.

“What was a curse became a blessing,” Guedes told Sheet and to two other Brazilian vehicles in the corridors of the Forum. “Brazil lost 30 years without connecting, but with the pandemic, the fact that we are not integrated means that we do not suffer disruptions.”

With that, he contradicts market forecasts — and his own ministry — and says that Brazil should grow more than 2% this year.

Guedes had ten bilateral meetings with executives in two days, in addition to two dinners and a coffee with investors (the agenda continues at the same intensity for two more days). According to him, they are mainly companies interested in putting money in the country – despite the scenario of global turmoil and the geopolitical redesign.

The focus of the annual meeting is the War in Ukraine and its impact on food supplies and fuel prices, which put pressure on inflation in most countries. This, in turn, forces a rise in interest rates, which ends up holding back growth.

In a document published on Monday (23), economists linked to the Forum painted a gloomy picture that could push the world to the brink of recession and set back globalization.

For Brazil, in Guedes’ assessment, this could be an advantage: “Brazil has not broken any production chain and can redesign its productive chairs with new axes, such as renewable energy, semiconductors, everything the world is looking for.”

He would echo the remarks during the Forum’s dinner with politicians and executives from the region in which questions about Latin America were debated. At the event, to which he was applauded, he spoke of the opportunities that Brazil and its neighbors offer in natural resources and defended greater integration, resurrecting the idea of ​​a single currency with Argentina.

Guedes’ opinion about the country is shared by private sector economists. Mário Mesquita, from Itaú Unibanco, also sees the country’s position as advantageous.

“This conference is being marked by war and geopolitics,” he said. “In a complicated world environment, with the possibility of a more intense slowdown of the global economy, Brazil is seen as a well-connected economy because it is an exporter of commodities, of food.”

Mesquita and other economists interviewed by the Sheet emphasize a tendency towards “safe shoring” and “friend shoring”: in the face of geopolitical turmoil, countries have preferred to do business with closer and friendlier nations.

Thus, at the Forum, Guedes tries to sell Brazil as an option to Europe and the United States (“we are close and we are friends”, he jokes). But without turning your back on China, he stressed. “The Chinese and the Americans had a synergy that lasted 30 years, then China grew and they started to fight. We will dance with both of them.”

The plans, however, could stumble on dividing Western governments into pro-Russian and pro-Russian countries. According to the minister, there is pressure especially in Europe for the traditionally neutral country to take a side.

So far, the country has condemned the “hostilities”, but not Moscow. The Russian government, which is often a heavyweight in Davos, was excluded from this year’s openly pro-Ukraine event.

The demand on another issue in which Brazil had been criticized, the environment, would have cooled down after the exchange of minister Ricardo Salles for Joaquim Leite, says the minister, who now sees more concrete chances of the country becoming a member of the OECD, an organization that brings together the rich countries.

Guedes says the country has been seen as “much more constructive in the debate”, and the criticism has dissipated. This reality was not reflected in the Forum, where Brazil does not participate in the main discussions on environmental preservation and the climate crisis, one of the themes of the year.

At dinner, he even said that Europeans could not question the countries of the Amazon region because of the forest fires, and compared the devastation of the biome with the fire at Notre Dame Cathedral, in Paris, in 2019, saying that if it was difficult to take care of a block, “imagine an area the size of the Amazon”.