Economists last year grew accustomed to talking about Brazil’s economy as characterised by having one foot on the brake and the other on the accelerator. The brake was interest rates as the central bank sought to curb overheating and the accelerator was fiscal policy as the government sought to spend its way to an election victory.
But recently, analysts have begun talking about Brazil’s “two-speed economy” – one in which domestic demand and credit growth, though cooling, are still growing at the sort of high levels not seen in many other parts of the world while domestic industrial production is actually in decline. Continue reading »
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