Brazil’s economy minister warns world of stagflation and ‘very rough times ahead’

Brazil’s Economy Minister Paulo Guedes denounced state-run planned economies as the road to “misery”, explained how market economies put Brazil on the “road to prosperity” and warned that much of the world will suffer years from “stagflation, high interest rates, inflation, [and] Slow growth.”

In an exclusive interview with Fox News Digital, Guedes described how in the “last 30 to 40 years” Brazil has left the “road to misery”. Successive governments have delivered “low growth” and “high corruption” under a “statist economy” that was “centrally planned.”

In contrast, Guedes attributes Brazil’s current prosperity to “market economies”. This consists of decentralized decision-making and the “opening of the Brazilian economy”. Guedes said: “We are cutting taxes. We stimulate the increase of private investments. We privatize [on] the path to prosperity – a classic recipe for growth.”

Brazil’s economy is showing solid growth as the country continues to recover from the coronavirus pandemic, despite the impact of the Russian invasion of Ukraine. The Economy Ministry in September revised growth forecasts from 2% to 2.7% due to “widespread expansion in various sectors”, with similar forecasts for 2023. Private economists expect 2.39% growth this year and 0. 5% remain more realistic targets next year. Reuters reported.

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Guedes studied economics at the University of Chicago in the 1970s and learned from Nobel Prize-winning economist Milton Friedman, an influential figure in South America, largely due to the “Chicago Boys,” a group of Chilean economists who studied under Friedman or themselves identified with him He then taught economic theory at the University of Chicago. The Chicago Boys implemented a rigorous free market policy during Augusto Pinochet’s military dictatorship in Chile.

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Guedes was given the opportunity to implement Friedman’s teachings when he was appointed head of the economy ministry in Brazilian President Jair Bolsonaro’s administration in 2019.

Brazil Economy Paulo Guedes Bolsonaro

Brazil Economy Minister Paulo Guedes speaks exclusively to Fox News Digital on a range of issues related to international relations and the economic recovery as inflation remains a top concern around the world. (Fox News Digital / Fox News)

One of Guedes’ areas of focus is the privatization of state-owned companies, which he says have “stolen” from the Brazilian people. He described “private pirates and bureaucratic robbers and swamp political creatures” permeating these corporations – resulting in “political power feeding economic power and then… political support bought back with corruption.”

In recent years, Brazil has been rocked by corruption scandals that have reached the highest levels of government. Then-President Dilma Rousseff was indicted in 2016 for alleged mishandling of the federal budget. Critics said it used accounting tricks to hide mounting deficits and bolster an embattled government.


Former President Luiz Inácio Lula da Silva, who is currently challenging incumbent President Jair Bolsonaro in a runoff election on October 30, was found guilty of corruption on several separate counts related to a scandal involving Petrobras, the state oil company, and came down eventually to jail. His conviction was later overturned by the Supreme Court, allowing him to run for public office. Lula was serving 580 days of an approximately 12-year sentence.

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In this context, according to Guedes, privatization leads to “separating political power from economic power. … They should be independent territories. That is the essence of democracies and market economies.”

Former President of Brazil

Former Brazilian President Luiz Inácio Lula da Silva speaks during an event to announce his pre-candidate for October’s presidential election May 7, 2022 in Sao Paulo. (Buda Mendes/Getty Images/Getty Images)

Against this background, Guedes described how the Bolsonaro government had pushed to “accelerate privatizations”. He added, “We just sold the largest renewable energy company in Latin America … we privatized another $30 billion to subsidiaries of large state-owned companies.”

When asked about significant investments in Brazil from the People’s Republic of China, Guedes defended Brazil’s policy of doing business with nations that can help the country improve its position. He pointed to the close US-China relationship that has stood “cheek to cheek” for the past 30 to 40 years while the US has not “touched” Brazil.


“We like and love the US, but you’ve been dancing with the Chinese for 40 years, and now you’ve been upset with each other, and we haven’t danced with anyone in 20 or 30 years,” Guedes said. “We have closed our economies. Now we are opening up the economy and receiving investment from all over the world.”

Guedes recently announced economic gains would allow the government to raise salaries after years without a significant increase in the minimum wage, Reuters reported.

“We are changing it from a state-driven economy to a market-driven economy, but at the same time we are providing protection, social protection, to the most vulnerable Brazilian citizens,” Guedes explained. “What we have now is that for the first time since 2013 all levels of government are in surplus, federal, state and local at the same time, inflation is already falling.”

“We, on the other hand, are trying to walk the path to prosperity despite COVID, despite war, [the] Invasion of Ukraine by Russia, despite this geopolitical war,” continued Guedes, saying “Brazil is moving and growing” because of “the right policies”.


Guedes pointed out that Brazil is “growing faster than any previous forecast and we will have lower inflation than … all G7 countries. So we are growing faster than the G7 countries and have lower inflation than the G7 countries. “

Brazil’s success stands in sharp contrast to neighboring countries’ struggles: “Latin America is melting together,” he said. “Our neighbors will go into misery.”

More broadly, Guedes hinted that he sees “very tough times ahead,” adding, “I see the US and Europe heading into a synchronized stagflation process.” According to Guedes, “Brazil is not in tune… Not that we would be better It’s just that we got out of rehab because we’ve stayed out of the globalization process for the last 30 years with a closed economy, lots of taxes, hyperinflation. So we were out of sync with the world economy.”


Guedes predicted: “I think inflation will go up. I think there will be stagflation in Europe and the US.


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