Finance Minister: Brazil does not face threat of recession like in Europe
Finance Minister Joaquim Levy 
This year's public spending cuts should not deepen economic recession nor lead to a scenario similar to that of European economies, Finance Minister Joaquim Levy said Thursday (May 7). In a seminar at the Court of Audits, he said that the economic realities are different and reiterated that growth in Brazil will pick up again as fiscal balance is restored.
According to him, Europe is experiencing demand shortages, whereas Brazil was facing inflation due to an over-buoyant economy before the fiscal adjustment. “Europe is completely different from Brazil. There's no inflation there – this shows how different they are. Here, demand was in excess rather than in shortage,” the minister said.
Asked if a fiscal adjustment could worsen the economic recession, Levy noted that in several European countries, governments have had difficulty adjusting the accounts, because the public spending cuts slow down economic activity. With lower revenue due to lower production and consumption, countries find it more difficult to balance the public accounts.
He believes the slow European growth does not boil down to spending cuts, but to structural problems such as a stagnant job market. “In Europe, there are other reasons why the economy has not been growing. They need to make structural changes that go beyond fiscal [adjustment]. In Brazil, hard, but indispensable measures are needed, but the economy will respond positively,” he said.
While he regards fiscal adjustment as the main measure needed at this time, the minister advocated other reforms, such as realigning government-managed prices – fuel and energy – and resuming the concession agenda. In his view, correcting the course of the economic policy will help the country resume growth, because it provides clarity for business investors and leaders to expand investment and create jobs.
“New possibilities open up when the government gives its policy a clear direction. Correcting the course will help create favorable conditions for businesses and professionals to find new alternatives to revive the economy, thus improving employment and income levels,” said Levy.
Translated by Mayra Borges
Fonte: Finance Minister: Brazil does not face threat of recession like in Europe
