Moving forward—or not—with structural reforms aimed at enhancing fiscal adjustment and lifting private investment will define whether a sustainable—or unsustainable—growth-cum-debt trajectory will prevail in Brazil in the next decade. The extent to which its economy regains its attractiveness for foreign investors will play a key role.
There is currently a convergence of views that, gradually or not, US current account deficits and insufficient domestic savings tend to slide down the relative value of the dollar. Four “channels of dollar transmission” explain why there is a negative correlation between the dollar's strength and economic growth of emerging market economies. A dollar depreciation against a wide basket of currencies in 2021 would likely be welcome by emerging economies.
Many donor countries seem eager to see middle-income countries “master out” and graduate to a non-client status in multilateral development institutions before fully achieving their development potential. We argue that such institutions can still significantly contribute to the sustainable development of Middle Income Countries, while also seizing many benefits from this relationship
Ao intensificar forças geopolíticas e econômicas já em ação, o impacto perturbador da pandemia no comércio internacional deixará uma marca duradoura. A pandemia está acelerando a história, ou seja, algumas tendências recentes estão sendo acentuadas. A pandemia não reverterá a globalização, mas a remodelará.
The pandemic is accelerating history, in the sense that some of its recent trends are being sped up. In the case of globalization, the pandemic will not reverse it, but it will reshape it. Here we take a bird’s eye view on global trade during the pandemic, relate it to previous trends, and guess how global value chain managers and governments’ trade policymakers are likely to react.
Otaviano Canuto (ex-World Bank, IMF, IDB) covers the current state of the region's economy, the role of multilateral organizations, Brazil's economic prospects and the post-COVID scenario for Latin America.
There was a significant inflow of funds in Brazil's external financial account in October and November for investments in both stocks and fixed income instruments. The bulk of the recent inflow has come in a “passive” way, and it did not include considerable volume on the side of “active” investors. For the wave to unfold in the availability of external resources to finance investments in the country, progress and confidence in the domestic fiscal and regulatory agenda will be relevant.
Houve entrada significativa de recursos na conta financeira externa do Brasil em outubro e novembro para investimentos em ações e em títulos de renda fixa. A maior parte do ingresso recente veio de forma “passiva” e não incluiu um volume considerável por parte de investidores “ativos”. Para que a onda se desdobre em disponibilidade de recursos externos para financiar investimentos no país, serão relevantes os avanços e a confiança na agenda fiscal e regulatória domestica.
How the IMF and World Bank came into existence, why they are needed, what were the problems these institutions were designed to fix? So why has it seemed that, in recent decades, these institutions have become more concerned with promoting capital account liberalization more so than anything else? A case could be made that some of the prescriptions of the IMF and World Bank may not actually improve the economic prospects of the countries they engage with. What is your take on their effectiveness? Can the IMF do a better job of perhaps staying away or “doing no harm” by choosing not to lend to countries who are insolvent, or are there actually things that they can do to help? So, could these institutions use a healthy dose of not only educational diversity, but also geographical diversity in its leadership and staff? Is there a world where we shift away from austerity being a condition for lending, or is the IMF so concerned about getting its money back—and a decent return—that they feel they have to impose these measures so they can appease the US and other member countries that hold large voting blocs? If the IMF and World Bank are to be truly international institutions, with input from all of its member countries, doesn’t the voting structure have to change, and isn’t the current voting framework quite different from how it was when the IMF and World Bank were created? So, what are some things they should be proud of, and what do you believe should be the role of the IMF and World Bank in the 21st century?
The global economic activity has climbed up since June but there are signs that the recovery may be losing momentum. Instead of a V, U, W, or L, a square root as a recovery shape looks more likely, as we approached before in this series. And the crisis is likely to leave deep, unequal scars on segments of the labor market, while a reallocation of resources among sectors is already taking place
The pandemic global financial shock has sparked the inclusion of QE as a policy tool also available for central banks of EME. Nonetheless: - QE targets are on the yield structures of interest rates. If there are fragilities leading to high basic, short-term interest rates, QE will not get much in terms of results. - QE should not raise concerns about “fiscal dominance”, because otherwise it will be self-defeating. Capital outflow pressures may exacerbate. - A prolonged stay of central banks as buyers in local currency bond markets may distort market dynamics. A permanent role of the central bank as a market maker, especially in primary markets, will impair the development of the domestic financial market. Consideration should also be given to the effect of asset purchase programs on possible overvaluation of assets, as well as on collateral availability in the banking system and its impact on the policy rate transmission
A percepção de riscos fiscais, ou seja, de não retorno a alguma trajetória não explosiva a partir do ano que vem é o que subjaz tanto a subida de juros longos quanto, em parte, a persistência da desvalorização cambial. O Tesouro pôde evitar ter que pagar juros mais altos na cobertura do extraordinário e justificável déficit público desse ano mediante endividamento de curto prazo. Mas em algum momento à frente as necessidades de rolagem vão impor um enfrentamento daquelas dúvidas, até porque o encurtamento da dívida também acentua a vulnerabilidade diante de surtos de desconfiança. Nesse contexto, fazer twist com a dívida pública, mesmo com a venda de títulos curtos enxugando a liquidez colocada via compra de dívida longa, poderia incorrer em outro risco. Se os juros longos estão refletindo prêmios de risco fiscal exigidos por detentores, reduzir juros na marra pode simplesmente levar tais detentores alhures, inclusive para fora, o que poderia levar ao círculo vicioso entre desvalorização cambial, inflação e taxas de juros.
1. Potenciais implicações da pandemia da covid-19 para a análise ASG: principais aprendizados decorrentes da pandemia de covid-19 para a análise Ambiental, Social e de Governança (ASG) de bancos e investidores 2. Questões ASG e COVID-19: a gestão de riscos na pandemia global
Public financing of green innovation: Matchmaking of offers and demand for financing - Relevant recent literature states that direct and pervasive public financing has been instrumental in the development of innovative technological trajectories. The reasoning builds on: (i) the presence of finance from public sources across the entire innovation chain; (ii) the concept of ‘mission-oriented’ policies that have created new technological and industrial landscapes; and (iii) the entrepreneurial and lead investor role of public actors, willing and able to take on extreme risks, independent of the business cycle. On the other hand, public financing depends largely on the availability of funds. The available capital (human or otherwise) for different jurisdictions is different, which may motivate a case for heterogeneity of policies regarding innovation funding. ------------------- Economic and Political Impacts of COVID-19 on BRICS Countries The event, organized by GEBRICS/USP and the Department of International and Comparative Law (DIN) of the Faculty of Law, University of São Paulo, aims to bring together professors, researches, specialists and diplomatic representatives from all BRICS countries
The action of central banks has been more reactive than proactive, more reflex than cause, and in their absence, macroeconomic performance would have been even more mediocre than it has been. There is a mismatch between the trend of increasing stocks of financial wealth, occasionally cut by shocks and crises, and the creation and incorporation of new assets accompanying economic expansion. COVID-19 is helping reinforce such trends.