As the Brazilian Central Bank released the minutes of the last meeting of the Monetary Policy Committee (Copom) and signaled that it intends to continue maintaining the country’s basic interest rate (Selic) at 19.75% per year, the São Paulo manufacturers federation (Fiesp) hit the ground running with a strong call for a gradual reduction of the Selic.
“Our real interest rate is absurd. In other countries it is between 1% and 2%. We are not demanding that it be cut in half tomorrow. But we do insist on a responsible, gradual, precise reduction,” declared the Fiesp president, Paulo Skaf.
Backing his argument with numbers, Skaf pointed out that first half GDP growth was a weak 0.3%, with industrial output down 1%.
“This year we have to pay US$ 57 billion in interest. And it seems that is just fine. The risk is that we keep on throwing away a fortune in interest payments,” concluded Skaf.
Raul Velloso, an economist who specializes in public accounts, says Brazil must abandon “flight-of-the-chicken growth syndrome,” and achieve permanently sustainable growth.
“The big challenge is to reach higher levels of growth and maintain them. That is the only way to create jobs and income,” he declared.
Velloso points out that with GDP growth of almost 5% last year, Brazil was able to create jobs.
“But this year the indicators are not so good and not as many people are finding work. We have to wait and see if this is just a tendency,” he concluded.