1
CHALLENGES AND PROSPECTS
FOR THE BRAZILIAN ECONOMY
José Augusto Coelho Fernandes
Policy and Strategy Director, CNI
Brasilia, August 31th, 2015
2
Where we are
1. The Brazilian economy is under an intense process of
adjustment and course correction.
2. The fall in oil prices and the developments at Petrobras have
severe effects on both the economy and institutions.
3. Adjustments started in the fiscal area. The expectation is that
new steps will be taken towards a pro-competitiveness
agenda.
4. Politics and economy interact and turn the environment
more complex.
3
A sign of the need for adjustment:
Twin deficits
4
Economic policy and growth
THE CHALLENGE
Macroeconomic
adjustment
Competitiveness
agenda
5
The steps of adjustment
Phase I
Tariff
realism
Adjustment of
exchange rate
Adjustment of
public accounts
Reform of social
benefits
Streamlining of
subsidies
Contractionary
monetary policy
6
Competitiveness initial actions
Phase II
7
The ways out of the crisis:
what is feasible?
Domestic
consumption
Exports
Regulatory
reforms
Investment in
infrastructure
Government
expenditure
8
How long will recovery take?
9
The possible recovery dynamics
Exchange rate
devaluation
+
Exports
Real wage fall
Moderate
Inflation
reduction
Monetary Policy
i
Increase in families disposable
income
R
E
C
O
V
E
R
Y
?
10
Yes, many issues to face
but...
Institutions are a source of confidence
11
External control agencies ranking
Brazil
12
Source: MELO, Marcus. Seminário IBRE — A AGENDA DE CRESCIMENTO DO BRASIL, 2015
Justice independence in Latin America
Brazil
13
Source: MELO, Marcus. Seminário IBRE — A AGENDA DE CRESCIMENTO DO BRASIL, 2015
Public administration quality
14
Source: MELO, Marcus. Seminário IBRE — A AGENDA DE CRESCIMENTO DO BRASIL, 2015
Constitutional powers of the presidents
Brazil
Source: MELO, Marcus. Seminário IBRE — A AGENDA DE CRESCIMENTO DO BRASIL, 2015
15
And…
INDEPENDENT
MEDIA
ACTIVE
CIVIC SOCIETY
CONGRESS
16
The industry agenda
17
The industry agenda
18
19