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This post may refer to COVID-19

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‘There will be a recession,’ but not in Brazil – economy minister

Most advanced economies, including the US, will be hit by a recession, but Brazil will be spared, the country’s economy minister, Paulo Guedes, said.

“There will be a recession out there,” Guedes told the Painel Telebrasil Summit, organized annually by telcos association Conexis Brasil Digital, on Tuesday in Brasília.

Adverse shocks like rising inflation and high interest rates will cause low growth, but no recession, Guedes said. He criticized media narratives which would be excessively pessimistic about the country's economy.

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“Despite the very high interest rates, the economy will slow down, but it will not go into recession. Instead of growing 3%, we are going to grow 2%,” largely because of the structural reforms that were carried out, he said.

Inflation either has already peaked or is about to, Guedes said.

During his speech, Guedes said Brazil remains attractive for investments and encouraged the telecom sector to uphold its plans for the country, urging executives “not to be scared.”

Regarding global economic woes, Guedes said “the noise outside will be deafening,” but Brazil is prepared internally.

In 2021, Brazil's largest telecom operators invested 35.2bn reais (US$6.70bn) – 38.5bn reais when spectrum disbursements are included. Similar amounts, excluding spectrum, are expected for this year.

Guedes said that the telecoms industry in the country has a tax burden of around 40%.

The sector is one beneficiary of a newly approved cap for rates of the ICMS state tax on services considered essential, such as telecoms, fuels and energy. Guedes also said the government plans to keep lowering the industrialized products tax (IPI) until it eventually reaches 0%.

These taxes are regressive and led to the country's de-industrialization, Guedes said.


Nearshoring provides opportunities for Brazil amid global value chain disruptions, as operations, manufacturing, and support operations could be brought back, according to Guedes.

Brazil would benefit from geopolitical aspects, as it has good relations with the US and Europe and is distant from war zones. But “it's not enough to be close, you have to be a friend. You need nearshore and 'friendshore',” said Guedes at the event.

The minister also believes it is possible to set up an advanced semiconductor factory in the country to help meet global demand, although experts have raised doubts.


Sílvio Cascione, director of risk consultancy Eurasia Group in Brazil, said the view of foreign investors and companies is improving.

“Faced with this enormous challenge of the war, the pandemic we have been experiencing, the energy transition, Brazil presents itself as an increasingly attractive opportunity,” said Cascione, citing nearshoring as one opportunity.

According to Cascione, Eurasia Group has received more inquiries about how to invest in Brazil despite challenges such as the upcoming elections and the global economic downturn.

Eurasia sees former president Lula as the favorite to win the elections, although the race will be tighter than current polls suggest, Cascione said.

Political fragmentation and polarization will generate governance challenges in 2023, he said, but also potential for continuing structural reforms, which any president will pursue.

“Be sure about it: the tax reform will come back with force in the next legislature, with the next president,” Cascione told the event.