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Guedes says the markets are underestimating Brazil, The Economist dismisses

RIO DE JANEIRO, Nov. 12 (Reuters) – Brazil’s Minister of Economic Affairs, Paulo Guedes, said Friday that markets are underestimating the country’s growth potential, adding that the economy is up more than 5% this year and by at least 1% in 2022 % will grow.

Guedes this week denied criticism from The Economist for supporting the government’s attempt to circumvent a constitutional spending ceiling that was vital to the straightening of Brazil’s finances.

“The Economist should look at its own navel. Brazil is better than the major economies, especially the UK,” he said, referring to the country where the magazine is based.

Guedes ironically said: “The country that has to do well is England. There are queues to buy a car, a meat shortage and GDP has fallen 9.7% while we have fallen 4%,” said he.

The Brazilian central bank’s Focus survey of economists, which is considered an indicator of market sentiment, reduced growth expectations for the next year from 1.2% to 1%. Some financial analysts are already forecasting growth close to zero and warning of stagflation or persistent inflation with slow growth.

“You continue to underestimate Brazil. You underestimated when we went down and I think you will be wrong again,” Guedes told Reuters on Friday in a telephone interview.

He said Latin America’s largest economy has a solid footing, despite the economic shock caused by the coronavirus, which is leading to record unemployment.

“Fiscal fundamentals are very strong and the central bank is chasing inflation,” he said. In October, the consumer price index rose 1.25%, the strongest monthly increase since 2002, pushing the annual inflation rate to 10.67%.

Guedes stated that despite the pandemic, the country is generating massive investments like the ones made by private companies in the 5G telecommunications auction last week.

Reporting by Rodrigo Viga, letter by Anthony Boadle; Editing by Aurora Ellis

Our Standards: The Thomson Reuters Trust Principles.

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