Brazil: new government, new economic policy?

The Brazilian economy will grow very little in 2015, the first year of Dilma Rousseff’s second term, following stagnation of GDP in 2014. The new round of interest rate hikes will soon be joined by fiscal tightening, while the exchange rate will also continue to depreciate. In these conditions, inflation will hold at around 6%. The Brazilian economy faces major challenges. There is a risk that the next adjustment in economic policy is viewed as either falling short or being temporary.

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