Brazil is in a privileged position to go through the global crisis, says Krugman, Nobel Prize in Economics

The US economy has not yet entered recession, but there is a possibility that it will occur in the coming months.

In a scenario of slowdown in the global economy, Brazil is one of the emerging countries best positioned to go through the adverse period with a little more resilience.

The assessment is by Paul Krugman, an American economist who won the Nobel Prize in Economics in 2008.

According to the expert, although two consecutive quarters of falling GDP (Gross Domestic Product) are used by some analysts as the technical concept to define a recession, the American economy is not yet at this stage.

For Krugman, the still thriving job market is a sign that the recession has not yet arrived in the United States.

“The United States is not yet in recession, although it may enter in the coming months”, said the economist, during participation in the FebrabanTech event this Wednesday (10), in São Paulo.

He acknowledged, however, that a slowdown in the pace of economic activity in the region is underway, influenced by the tightening of monetary policy conducted by the Federal Reserve, the US central bank, to combat persistent inflationary pressure in the country.

The latest inflation data released on Wednesday, Krugman said, could be a sign that the rise in prices observed over the last few months is at the beginning of a trend reversal process.

Consumer prices were flat in July compared with June, a US Labor Department report released on Wednesday showed, marking the weakest monthly rate in more than two years as fuel prices fell.

“Inflation ahead should look better than it actually looks,” the economist said, adding that it was difficult to get an estimate of how long, and by how much, the Fed will raise rates to bring inflation back to target. of 2% per year.

In any case, the deceleration of the American economy, added to a probable recession in which Europe is already likely to find itself at this moment due to the consequences of the Russian invasion of Ukraine, indicates an environment of global financial crisis ahead, pointed out Krugman.

Krugman also said it was difficult to predict how long the war in Eastern Europe would last, but said he predicted that Ukraine would be victorious against Russia in the conflict.

Financial and military support from Western countries, the motivation of Ukrainian troops, sanctions against Russia and a military power not as strong as imagined about Russian military might were pointed out among the reasons that support the prediction.

Brazil is one of the least vulnerable emerging countries in a scenario of global crisis, says the economist

In a scenario of global economic crisis in the coming months, Krugman stated that Brazil is in a privileged position.

Either because the country is relatively self-sustainable in terms of energy supply, or because of the strong export bias of agricultural commodities, which benefits the region with the rise in raw material prices in the international market and in the dollar.

The economist also stated that the impacts of the Russian invasion in Ukraine, and the export agenda similar to the Brazilian one, represents an opportunity to be explored by the country.

“Brazil is one of the least vulnerable emerging countries in a scenario of global crisis, despite the domestic problems it is going through,” he said.

He added that it is possible to draw “obvious parallels” between Brazil’s political scenario and that of the United States, in an apparent veiled mention of attacks on the democratic process promoted by former US President Donald Trump and President Jair Bolsonaro (PL).

Asked about the potential of bitcoin, the economist stated that he does not see cryptocurrencies with the potential to represent real competition to traditional currencies.

Bitcoin is no longer such a new topic on the market, having emerged after the 2008 financial crisis, and, to this day, there is still no significant use of cryptocurrency for commercial relationships, Krugman said.