A Strong External Adjustment

BRAZIL ECONOMICS - Report 03 Nov 2015 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

Unlike in many past crises faced by Brazil, the current one does not involve a balance of payments problem. Contrary to the several past episodes, Brazil now has a high level of international reserves and is experiencing a substantial decline in its current account deficit. In past crises, such as the one provoked by the speculative attack in 1998 that led to abandonment of the exchange rate peg, the depreciation was caused by stark capital flight. In contrast, the depreciation in 2015 is predominantly caused by the increased risk (measured by the rising quotations of Brazil’s CDS) associated with the worsening fiscal picture and unsustainable growth of the public debt. The origin is domestic and is not connected to the balance of payments.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.