Inflation in Brazil has already peaked, says Guedes in Davos

Minister Paulo Guedes (Economy) said in Davos this Thursday (26th) that inflation in Brazil is already at its peak, although he did not say that it will begin to fall now.

The IPCA-15, a kind of preview of inflation for the official consumer, has accumulated an advance of 12.30% in 12 months, and economists predict that the double-digit level will only begin to decline in October.

“Inflation has already reached its peak. And it will return sooner than theirs,” said Guedes about European countries and the United States. “It will go up all over the world for a long time, 10, 15 years. But not in Brazil. Outside.”

The minister is in the Alpine resort to attend the annual meeting of the World Economic Forum, which ended on Thursday in the shadow of a new global economic crisis triggered by the Ukrainian War.

During his four-day participation, Guedes showed optimism and sought to promote Brazil as a country where the house would already be tidy in fiscal and monetary terms to enable growth, while much of the world anticipates a recession.

Despite the unfavorable external scenario, Guedes says he is betting on the country’s internal growth dynamics to drive recovery. Asked about the fact that inflation slows down consumption, the minister replied that “there are always people” who are winning and “inflation does not impede growth”.

“Of course, it is bad for growth. It has perverse redistributive effects. But we are already fighting it. We removed fiscal stimulus. Growth could have been higher last year, but we held back.”

For Guedes, the private investment agreed for the coming years will be sufficient as a motor. He estimates an injection of around R$80 billion a year for the next ten years, not including ongoing or future privatizations.

“On the one hand, we have the resumption of investments, which is the foot on the accelerator of the economy. The monetary fiscal part has adjusted, inflation will go down, and investment is going up. But the Central Bank is still pulling the brakes. growing more, as we are fighting inflation while growing less.”

The minister left Davos excited by what he described as a change in perspective in relation to Brazil. In his view, the country is no longer seen with the distrust and even some hostility that he says he felt in 2019 and 2020 and became more respected.

“Our performance dismantled the disbelief in relation to Brazil.” With the crisis, “Brazil is now perceived differently,” she said. “It is a democracy, improving institutions and therefore noisy, in transition to a market economy and a green giant.”