Brazil faces a challenging economic scenario, with a unsustainable debt trajectory which demands urgent reforms, according to Solange Srour, Macroeconomic Director of UBS in Brazil.
In an interview with CNN MoneySrour highlighted the importance of the next elections for the country’s economic future.
According to the expert, there is a consensus in the market and society about the need for reforms Important not close presidential mandate.
“We are in an unsustainable debt trajectory, this is recognized by the government itself,” Srour said, warning of the risk of public machine stoppage or a very bad debt trajectory if nothing is done by 2027.
Srour emphasized that, regardless of the outcome of the elections, the reforms will be inevitable.
“If we take a long time to do, whatever the government to assume in 2027, we will suffer a very intense slowdown in economic activity,” he warned.
She compared the current situation with the 2014-2016 economic crisis, noting that without reforms, the country can enter a deep recession.
The economist listed three economic priorities that should be discussed in the election campaign:
- Change in the minimum wage rule, possibly detaching it from GDP;
- DISPOSAL OF THE FLOOR OF EDUCATION AND HEALTH COLLECTION;
- Social security and administrative reforms.
Perspectives for foreign investments
As for the recent flow of foreign investments in Brazil, Srour clarified that this is not yet a bet on reforms, but a portfolio diversification over US assets.
“What has brought the gringo to Brazil is the diversification of the portfolios that were very concentrated in the United States,” he explained.
The expert concluded that a possible scenario of structural reforms could motivate a new flow of foreign investments to Brazil, but stressed that this would probably occur closer to the 2026 elections.
