Synthesis of the Brazilian Economy
As the war caused by the Russian invasion of Ukraine enters its third month, the hopes of a peace agreement in the near future are fading. The countries that had assumed the role of interlocutors, such as Israel and Turkey, have begun supporting the supply of weapons to Ukraine, and even Germany, reluctant regarding sanctions on Russia due to its strong dependence on Russian gas, has decided to supply heavy arms to Ukraine. Hence, Western nations are hunkering down for a long war, with acute effects on their citizenry. Meanwhile, the rigorous lockdowns provoked by the resurgence of Covid in China have been met with protests by those affected, due to supply shortages and uncertainty about the extension of the negative impact on the country’s economy. And in the United States, in response to the growing inflationary pressures, the Fed will likely hasten the tightening cycle, with impacts on the asset prices throughout the world. Finally, the ECB has been cautious because of the war.
While Brazil is not directly affected by the war, and indeed is comfortably ensconced with abundant energy and commodities, it cannot avoid being affected by the inflationary shocks and monetary tightening in the United States, as well as the recessive impacts of the war, with interruption of supply chains. Besides this combination of external events, whose effects are hard to measure, the increasingly bitter internal political tensions, with sharp polarization between Bolsonaro and Lula, are starting to charge a price.
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