All the programs adopted in Brazil during the pandemic worked, says Guedes

Despite economic stagnation, high unemployment and loss of income for Brazilians, Economy Minister Paulo Guedes said that all programs adopted by Brazil to face the effects of the pandemic were successful. The speech took place during a virtual panel at the World Economic Forum in Davos this Friday morning (21).

“We are ready to take off again. All our programs [para lidar com a pandemia] were successful, that of job preservation, credit lines, direct income transfers. And we are ready to vaccinate mass, as long as you continue to produce vaccines and we produce them here”, he said.

“We were successful in avoiding a great depression after being hit by the pandemic and now we have entered a stage of deceleration. And now the question is how long will the effects on inflation last”, pointed out the minister.

“Our debt/GDP ratio today is 80%, below forecasts. People were worried, but we created 4 million jobs, 3 million formal ones, and we preserved 11 million,” said Guedes.

The country registered the creation of 324,100 formal jobs in November, 13% less than a year earlier, according to Caged (General Registry of Employed and Unemployed). In the accumulated from January to November 2021, the balance of the is 2.9 million new job openings.

In 2020, after the Caged data were revised, the balance of formal employment in the country was negative, closing 191,500 jobs in the first year of the pandemic.

Guedes participated in a panel that discussed how the international trade system will need to adapt to new brakes beyond the pandemic and how businesses and governments can work together to reduce the effects of these disruptions.

He also said that Brazil has fiscal and monetary space to recover now and said he does not believe that inflation will be transitory. “Central banks are sleeping at the wheel and need to wake up to the issue of inflation. My feeling is that the beast is out of control. In Brazil, because of the tragic experience we had with inflation, we moved quickly.”

The panel also featured IMF (International Monetary Fund) Director-General Kristalina Georgieva, ECB (European Central Bank) President Christine Lagarde, Indonesian Finance Minister Sri Mulyani Indrawati, and Central Bank President from Japan, Haruhiko Kuroda.

“The year 2022 is going to be an obstacle course race. On the positive side, we predict that the recovery will continue, but some of the momentum is being lost,” said Kristalina, Georgieva, of the IMF.

“If we look at inflation, price pressure comes from food, from production chains, because of the effects of the pandemic. And we have a phenomenon related to the pandemic, which is the job market is changing.”

“Central banks must be clear in their actions, but monetary policies must be right as well. And unfortunately, this is still not being done as it should be,” she said.

Georgieva also pointed out that the drugs to be applied now to combat the effects of the pandemic are different from those tested two years ago. In 2020, the problems were similar around the world. In 2022, we can no longer have the same economic policies in all countries, as the problems are different.

“We have seen a stronger recovery than we had imagined and the developed countries are now putting the brakes on. In a way, we are victims of our success, with the arrival of vaccines,” said Lagarde. “Looking at what’s behind the world, we’re trying to figure out where inflation is coming from and how long it’s going to last.”

“We see a recovery so strong that it ended up overcoming part of the supply, these factors [causados pela recuperação após a queda pandemia] Will you be with us for a long time? We are considering, despite the uncertainties, that the energy crisis will stabilize throughout 2022 and the inflation numbers will fall”, pointed out Lagarde.

Already Idrawati commented that Indonesia has done its homework to solve the global problem of high inflation without alienating investors.

“The increase in demand due to the reopening of the economy has been slower in Japan and the memory of what the country suffered with inflation in 1998 is still very strong,” said Haruhiko Kuroda, saying that inflation in the country was a less of a problem than in other parts of the world.

“The Central Bank of Japan has managed to accommodate inflation efficiently and we will continue with low interest rates. The economy has started to grow, although inflation has returned to positive after years of deflation”, said the responsible for the Japanese Central Bank.