The loosening of the fiscal target announced by the Brazilian government has generated broad repercussions on the national economic scenario.
According to experts, the relaxation of fiscal targets can impact several sectors of the economy, influencing everything from monetary policy to investor confidence.
Analysis of consequences
The adjustment of the fiscal target, which implies an increase in the budget deficit, raises concerns about the sustainability of public accounts and inflation control.
Furthermore, changes in fiscal projections may impact economic agents’ perception of the country’s business environment and macroeconomic stability.
Expectations regarding Selic
Given the loosening of the fiscal target, financial analysts have revised expectations for the basic interest rate, the Selic.
They point to a possible increase in the Selic rate, in contrast to previous projections of a drop, as a response to the increase in country risk and greater fiscal uncertainty.
Financial market analysis
The revision of projections for the Selic rate reflects the financial market’s reaction to changes in the government’s fiscal policies.
Uncertainty regarding the trajectory of the basic interest rate can generate volatility in the markets, influencing investment decisions and the performance of financial assets.
Impacts on the real economy
The consequences of the loosening of the fiscal target are not limited to the financial market, but extend to the real economy.
Businesses and consumers that depend on foreign trade may feel the effects of exchange rate volatility and economic uncertainty, which can disrupt business planning and investments.
Prospects for economic growth
Given the uncertainties caused by the loosening of the fiscal target, the outlook for Brazil's economic growth may be revised downwards.
The lack of clarity regarding the conduct of fiscal and monetary policy may compromise economic recovery and the confidence of economic agents in the country.
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