Krugman, a Nobel laureate in economics, says that Brazil is in an advantageous position to weather the global crisis

Krugman, a Nobel laureate in economics, says that Brazil is in an advantageous position to weather the global crisis

The US economy has not yet entered a recession, but there is a possibility that it will happen in the coming months.

In the scenario of a slowdown in the global economy, Brazil is one of the emerging countries that are best able to weather the adverse period with greater flexibility.

Evaluation by Paul Krugman, 2008 American economist and Nobel Prize laureate in economics.

According to the expert, although some analysts use two consecutive quarters of declining gross domestic product (GDP) as a technical concept to define a recession, the US economy has not yet reached this stage.

For Krugman, the still-booming job market is a sign that the recession has not yet reached the United States.

“The United States is not in a recession yet, although it may enter in the coming months,” the economist said, while participating in the FebrabanTech event on Wednesday (10), in Sao Paulo.

He admitted, however, that there is a slowdown in the pace of economic activity in the region, affected by the tightening of monetary policy by the Federal Reserve, the central bank of the United States, to combat the persistent inflationary pressures in the country. .

Krugman said the latest inflation data released on Wednesday may be an indication that the surge in prices observed over the past few months is the beginning of a trend reversal process.

A US Department of Labor report released on Wednesday showed that consumer prices were flat in July compared to June, posting the weakest monthly rate in more than two years as fuel prices fell.

“Future inflation should look better than it actually looks,” the economist said, adding that it was difficult to get an estimate of how long, and how much, the Fed would raise rates to bring inflation back to target. general.

In any case, the slowing of the US economy, as well as the possible recession in which Europe is likely to find itself already at this moment due to the consequences of the Russian invasion of Ukraine, points to an environment of the upcoming global financial crisis, Krugman.

Krugman also said it was difficult to predict how long the war would last in Eastern Europe, but he said he expected Ukraine to prevail over Russia in the conflict.

Financial and military support from Western countries, motives of Ukrainian forces, sanctions against Russia, and a military force not as strong as the Russian military envisions were cited among the reasons supporting the prediction.

The economist says that Brazil is one of the least fragile emerging countries in the global crisis scenario

In the scenario of the global economic crisis in the coming months, Krugman stated that Brazil is in an advantageous position.

Either because the country is relatively self-sustaining in terms of energy supply, or because of a strong bias to export agricultural commodities, which benefits the region with higher prices for raw materials on the international market and dollars.

The economist also mentioned that the effects of the Russian invasion of Ukraine, and an export agenda similar to the Brazilian one, present an opportunity to be explored by the country.

“Brazil is one of the least vulnerable emerging countries in a global crisis scenario, despite its internal problems,” he said.

He added that it was possible to draw “clear parallels” between the political scenario of Brazil and the political scenario of the United States, in a seemingly veiled reference to the attacks on the democratic process promoted by former US President Donald Trump and President Jair Bolsonaro (PL).

When asked about the potential of bitcoin, the economist stated that he does not see cryptocurrencies with the potential to represent real competition to traditional currencies.

Krugman said that Bitcoin is no longer a new topic in the market, it appeared after the 2008 financial crisis, and to this day, there is little use of cryptocurrency in commercial relations.

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