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Brazil is suffering its worst recession since the 1930s, perhaps of all time. And the worst political crisis, triggered the greatest scandals the country has ever seen in its’ history. Mauricio Molan spoke in a recent interview with Valor Magazine, where he talks about the current economy situation. In his interview he is giving some numbers that might convince us of the beginning of something new. Is something coming out of a country that looks like it is “rotten”?

Molan is speaking through a clearly financial perspective throughout his interview, and not that much through a political perspective. He reminds us that the confidence indicators are very powerful to a country’s economy and in the case of Brazil, they are already showing recovery. Along with the trust and the confidence to a market, there comes the financial markets stability and growth. The stock has seen a rise of 30% since the beginning of the year, he claims, while the long term interest rate 2022 fell from 16.5% to 12.5%. All this has a substantial impact on the economy, which will see a recovery process soon, according to Molan.

The confidence generally plays a very important role, more than what we can possibly imagine. Trust issues are the main reason the economy was brought down in the first place. Uncertainties related to the tax issue led investors and consumers to being more cautious, which also brought down the domestic demand. At the moment, taxation in the country is looking at an improvement due to the current government reform plans, and when this actually happens, the confidence will be eventually restored. It will take about six months between improvement in confidence indicators and actual improvement in financial market indicators and effective impact on the real economy indicators, Mauricio claims.

In response to the Lava-Jato operation and its’ relativity to the crisis, Molan suggests that it is an event that only has a temporary effect. But it was not only Lava Jato that triggered the crisis. It is mostly related, he says, to the production of gas and the general fall of the oil prices. The world today is not investing in the oil sector as much as it used to – a fall was expected, and the Lava Jato only made it worse, but temporarily. Another sector that should be addressed by the current government is the public spending, including on the unaffordable pension system. It is already in the process of being slashed, we are simply waiting for the government moves.

As to the investments in the country, he believes that now is the time to make money in Brazil. And how do you get foreign investments? For the country to attract foreign investments it is essential to simply provide the minimum degree of macroeconomic stability and then give them a reason to invest. The exchange rate is as low as never throughout history, and estate prices are also extremely low: “it’s time to buy Brazil.”

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Carlos Monteiro is a Brazilian citizen, graduated in Business Administration by the Catholic University of São Paulo. He lives in Odense, Denmark with his Danish Wife, Cathrine, and their half Danish /Brazilian daughter Ines Marie. You are very welcome to be in contact him at any time.
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