Brazil must improve productivity and achieve a better balance between investment and consumption, International Monetary Fund said in a report released Friday.
“Further efforts needed to achieve a rebalancing of domestic demand from consumption to encourage savings and provide space for investment,”
Global shocks have a negative impact on confidence and trade, contributing to a sharp slowdown in economic activity in the second half of this year, and the risk of “spillovers” further remain high. This complicates the calibration setting domestic policy challenges, “he said, adding that” it would be the key to allow sufficient time for relaxation of the current policy runs out, while standing ready to take further action which will materially reduce risk.
Bank has a good position to deal with shocks and financial system are also monitored closely, but the rapid growth of consumer credit, an increase in property prices and bank credit expansion should continue, thoughtful, careful and vigilant.
The IMF also “welcomed recent steps to strengthen the savings and competitiveness, including pension and tax reforms, but sees the need for further reforms to improve productivity.”