Government says worst of economic crisis is over

Finance Minister Joaquim Levy said Friday (Aug. 14) that the worst phase of the economic crisis facing Brazil has been overcome, but the fiscal adjustment measures should not be interrupted. In his view, the recovery of economic growth will be driven by companies focusing on exports. The minister believes several imported goods may be replaced with Brazilian counterparts in the future, which should revive the domestic market.

“The economy is restoring its balance,” Levy declared before a group of investors at a meeting held by the American Chamber of Commerce. He mentioned an improvement in the country's external accounts and balance of payments, adding that there has been a more favorable environment for attracting foreign investment. The minister instanced the state-controlled oil giant Petrobras, which has resumed its role in the economy. He also talked about Moody's, which retained its investment rating for Brazil. Levy went on to note that the country is no longer running the risk of facing power rationing.

The minister admitted that the fiscal adjustment measures are “uncomfortable”, but said the results will bring benefits in the medium term. Levy also predicted that the inflation should come down to between 5 and 5.5 percent by 2016, and to the center of the target—4.5 percent—by 2017.

The politician also described the reduction in Brazil's economic activity as a natural result of a slowdown in key markets, like China, which cut down commodity prices. “Brazil has some very important re-engineering to do, as it can no longer rely on the usual push from commodities,” he remarked.

Translated by Fabrício Ferreira