Rio de Janeiro – Plummeting economic activity, growing unemployment and inflationary pressure stemming from the readjustment of administered prices are the costs of the Brazilian federal government’s fiscal adjustment package, whose benefits will only be felt in the medium and long terms. So says the Applied Economics Research Institute (Ipea) in the 27th edition of its Carta de Conjuntura report, released this Tuesday (23rd) in Rio de Janeiro.
Uncertainty about how long it will be before society can sense the benefits of the adjustment has led the think tank’s economists to posit that Brazil is at the hardest stage of the process, “because the costs are clearly apparent, but the benefits are not visible yet,” said the coordinator of Ipea’s Conjuncture Study Group, Fernando Ribeiro.
For Ribeiro, 2015 will be a year of contraction in economic activity. “Even if some recovery takes place towards the second half, considering the decline [the economy] has seen thus far, the year will likely end on a down note.” The exceptions to the economic retraction process will be agriculture and mineral extraction, the latter of which is linked to oil, which will be on an upward curve throughout the year, according to the Ipea.
*Translated by Gabriel Pomerancblum
