The delicate economic situation in Brazil and worldwide, with Tharcisio Santos

The delicate economic situation in Brazil and worldwide, with Tharcisio Santos
This is a very troubled economic situation in Brazil and all world in this year end
with many uncertainties for next year
I'll talk now to Professor Tharcisio Souza Santos, director of FAAP-MBA
How are you, professor?
How are you, Luciene?
Everything all right or, better saying, more or less
It's complicated.
We have many incertainties
Starting abroad
There's a very complicated mood in the United States
exactly due to the discution between Republicans and Democrats
To solve the tax issue
In my opinion, soon or later,
they you make a deal, but Presidente Obama will make a concession
and relieve wealthiest taxpayers
This will take the United States to a slow economic recovery
And, in my opinion, next year will still be hard
but you can think about 3 or 4 years to the recovery
In Europe, situation is really more complicated
I don't see any positive scenario earlier than 5 or 6 years
It can be worse
It depends on how it's gonna be managed
by European Central Bank and the International Monetary Fund
and especially by a variable which is impossible to predict at this point: the German government and population behavior
Professor, what about the economic situation here in Brazil for next year?
Here in Brazil, situation is easier by one side and harder by the other side
Easier because Brazil is gonna grow more than United States and Europe
We are going to rise in the bigger GDP countries ranking
So, we will reach 2020, in the decade end
at best to the fourth position
by the worst prediction, maintaining the sixth position, where we are nowadays
The question is how it's gonna happen.
Because we've been seen a range of measures, apparently, without internal coordination
The bailout measures by the Finance Ministry?
They've changed the average interest rate
But didn't change the lengthening of domestic debt
so, the relief by the interest rate reduction
is not so strong over the government tax budget execution
it means that government continues with a very committed piece of budget
to pay debt
and there's no space to private companies bond market
and it is fundamental to Brazilian economy grow
we need a secondary market of companies' bonds
the Exchange is desperately seeking it
less BNDES (public loans) and more stock market
and things are not happening
This is one problem
Another of my concerns is the fiscal issue
Government is not doing a real effort
to reduce the current expenses
and, as a consequence, the investment capacity is very weak
so you need the private sector to do investments
to unlock the economy through infrastructure
infrastructure doesn't go on
innovation and education don't go ahead
cost of money goes on, but term debt don't
and you have an extra problem which is the Basel III
and its effect on the Brazilian banking system
that can reduce bank's reserve requirements
but this redution must be very well managed
so I thinks there are many problems, many variables
and there are lots of unsolved things
What about inflation in the first semester?
In my opinion, not under 5%
between 5,5% and 6%
risking exceed 6%
Economy seems to have an 'inflation flu' ahead
What about the individual? How can he protect himself?
I think that he must have few commitments
must be carefull with indebtedness
the credit market increase was very good this year
but indebtness and default have reached very high levels
so this year end and the 'thirteenth payment'
must be usde to pay debts than to shop
Professor Tharcisio, thank you so much for joining us on La Presse's website
Thank you.
From BM&FBOVESPA's studios, São Paulo, Brazil, I'm Luciene Miranda