Economy Minister Paulo Guedes said today (14) that the world is going through a turbulent period in the economy and it will only get worse. The statement was made at a conference at the Brazilian Investment Forum 2022 in São Paulo. The Forum brings together ministers, representatives of development banks and executives of global companies to discuss the Brazilian business environment. President Jair Bolsonaro also attended the opening of the event.
Guedes listed the reasons why it took so long for the world’s economic situation to improve. The first is that 3.7 billion people are lifted out of poverty in China, Russia, Eastern Europe, Southeast Asia, Indonesia through globalization. As a result, there is pressure in the West as the wages of those working in the industry have not increased in 30 years.
“For 30 years competitive pressure from Asia has hindered the growth of wages and earnings in the West. Factories are being handed over to Asia. Wages are starting to rise in Asia and are under pressure in the West,” he said.
“While the West is enjoying its wealth, giving six months’ vacations, living on generous early retirement, the other side of the world is working 24 hours a day, competing, no labor wages, wages rise there and fall here,” he said. “After 30 years this cheap labor arbitrage ends. When that happens, wages start to rise all over the world and inflation naturally rises in the US, in Europe, because these cost pressures have been around for a while.”
Pandemic
The second reason the turbulent moment continues, according to Guedes, is the covid-19 pandemic, which delivered a negative supply shock as the economy suffered a break in production chains that simultaneously produced more inflation and less growth. time. “While Brazil and the world are trying to get out of this negative situation, war is coming to Ukraine with its grain and to Russia with its energy. Thus, food and energy prices are rising all over the world,” he said.
Thus, according to the minister, the world is starting to think about the restructuring of production chains, which is reflected as an opportunity for Brazil. According to him, the bad side of the crisis is that “inflation abroad will be very high, there will be stagnation, and the political system will continue to be under pressure, very different from what it has been in the last decade, in prosperity and investment”.
“At the same time, this is an opportunity. Investments need to be close, not only that, countries need to be friendly. In the case of Brazil, those who are close and friendly with Europe, America, China, Russia. Are we here and we want to save the path to prosperity. We made a deal with everyone, We are in every block,” he said.
President Jair Bolsonaro, who was also present at the opening of the event, emphasized that inflation is widespread in the world. “What we’re going through right now, [ministro] “This is the problem of fuel and food inflation all over the world,” said Paulo Guedes.
Bolsonaro also stated that the policy of social isolation during the pandemic was not determined by him. “Who told the people to stay at home determined, it wasn’t me, I had the power to shut down the whole of Brazil. An unfortunate decision of the Federal Supreme Court took away my ability to handle presidential matters during the pandemic,” he said.
Privatizations and Investments
Guedes also commented on the privatization of ports, tax reduction and simplification, conversion of public banks, regulatory framework reforms, the arrival of private investment. “Brazil’s growth is guaranteed for the next few years. We are in the transition from a market driven economy that breaks and breaks the state”.
Guedes also highlighted the sale of BRL 250 billion of state subsidiaries, in addition to the government’s de-leverage of state banks, which repaid their debts to the Union and sent another BRL 240 billion to the federal government.
Concerning Petrobras, Guedes said it is necessary to sell distributors first, breaking the transport monopoly so that they are limited to its focus, which is the extraction of oil.
“Then we can also privatize and increase competition because the only consequence of a state-owned company being a vertical monopoly is, commodity At the investment stage. We haven’t invested enough in electricity and oil for decades. Brazil is growing less, income per person “It’s smaller, the profits are monopoly, it’s not even socially fair,” he said.
Guedes also pointed out that Brazil is today the world’s largest open investment frontier, with the reform of the regulatory framework allowing the country to expand the gradual resumption of private investment that guarantees the growth of the Brazilian economy. “Brazil is not like the world, it is starting to take off again. We were already taking off when Covid-19 started, we fell less during the crisis, turned faster and made reforms”.
According to him, there are two clear signs that will be the design of Brazil’s reindustrialization for the future, as well as reintegrating into the global chain: energy security and food security. “Brazil is a green giant with the cleanest and most diverse energy matrix in the world, and after long political struggles the Brazilian reality is emerging abroad. Europe looks at Brazil as energy security and Asia as food security”.
* Collaborated with Luciano Nascimento.
source: Noticias
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