I´m quite pessimistic about Brazilian economy on next year. The high
inflation suggests the need for monetary tightening and fiscal austerity
measures, which might damage economic activity in the short-run. Actually, considering the current weak economic activity and the low consumer and
business confidence, economic activity is already expected to be weak.
Monetary and fiscal policies will trail the opposite direction in the worst-case
scenario of water/energy rationing. This is the unknown variable, which seems to be more and more likely with the lack of rain. I´m quite pessimist at this time and i hope I´m wrong about the chaotic scenario of lack of water (in São Paulo state) and energy rationing all over Brazil. If we are complaining about the weak growth rate currently, next year will be even weaker, with possibility of long-lived recession. In this situation, investment plans will shrink even more...
