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CHALLENGES AND PROSPECTS FOR THE BRAZILIAN ECONOMY

José Augusto Coelho FernandesPolicy and Strategy Director, CNI Brasilia, August 31th,

2015

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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.

Where we are

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A sign of the need for adjustment:

Twin deficits

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Economic policy and growth

THE CHALLENGE

Macroeconomic adjustment

Competitiveness agenda

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The steps of adjustmentPhase I

Tariff realism

Adjustment of public accounts

Streamlining of subsidies

Adjustment of exchange rate

Reform of social benefits

Contractionary monetary

policy

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Competitiveness initial actionsPhase II

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The ways out of the crisis: what is feasible?

Exports

Investment in

infrastructure

Regulatory reforms

Domestic

consumption

Government expenditure

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How long will recovery take?

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The possible recovery dynamics

RECOVERY

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Exchange rate devaluation

+Real wage fall

Exports

Inflation reduction

Moderate

Monetary Policy

Increase in families disposable

income

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Yes, many issues to face

but...

Institutions are a source of confidence

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External control agencies ranking

Source: MELO, Marcus. Seminário IBRE — A AGENDA DE CRESCIMENTO DO BRASIL, 2015

Brazil

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Justice independence in Latin America

Source: MELO, Marcus. Seminário IBRE — A AGENDA DE CRESCIMENTO DO BRASIL, 2015

Brazil

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Public administration quality

Source: MELO, Marcus. Seminário IBRE — A AGENDA DE CRESCIMENTO DO BRASIL, 2015

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Constitutional powers of the presidents

Source: MELO, Marcus. Seminário IBRE — A AGENDA DE CRESCIMENTO DO BRASIL, 2015

Brazil

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And…

INDEPENDENT MEDIA

ACTIVECIVIC

SOCIETYCONGRESS

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The industry agenda

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The industry agenda

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