Brazil's troubled economy

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Brazil's troubled economy

The growing popularity of Lula de Silvia may give any outsider a feel that Brazil may be having its best times. Even the statistics will point out in this direction. But among all this superficial happiness, there lies a deep trouble with the economy. As inflation has crept up in recent months, keeping it under control has been left to the central bank. The role of fiscal policy, which continues to be highly expansionary, has been ignored and may seem to be good for now, but can't be sustained for long. If Brazil were to lose control of fiscal policy, it could end up undermining monetary policy. In the end, long-term inflation expectations are determined by fiscal policy, not monetary policy and will for sure lead to high inflation in Brazil and may even lead to over heating of the economy.

Category:

News & Politics

Tags:

• global
• report
• Brazilian
• President
• Lula
• De
• silva
• inflation
• Brazil's
• fiscal
• policy
• monetary
• Brazil

[obusca]

It's really hard to believe in a journalist with such bad accent. If he had any idea of what he was talking about, brazil would be having deflation at the moment. People should study just some economics before go around saying useless stuff