RIO DE JANEIRO, BRAZIL – Brazil’s Minister of Economy, Paulo Guedes, once again insisted on the proposal for the creation of a common currency between Brazil and Argentina as a way to face the new scenario of the world market of raw materials and energy that the world will face within the next decade, after the war between Russia and Ukraine.
Guedes’ statements were made while participating in an event at the World Economic Forum in Davos, Switzerland, where he expressed that the government of President Jair Bolsonaro is betting on a scenario of greater regional integration to face the turbulences of the international markets, especially as a result of the inflation of energy and food prices.
PESO-REAL
“I think we will probably see the peso-real,” Guedes said about the integration with Argentina, its main Mercosur partner and recipient of its industrialized products, according to what was reported from Switzerland by the news agency Estado.
In this context, Guedes foresaw that this scenario of a single currency, which he called “peso-real”, has a 15-year horizon based on the reconfiguration of world commodity markets and global chains.
This idea of Guedes is not new and has antecedents even before the pandemic, but it also gained strength within the opposition since the Workers’ Party has designed a medium-term plan to create a South American regional currency to avoid the use of the dollar in international trade, which is being carried out within the team of economic advisors of the presidential candidate and former president, Luiz Inácio Lula da Silva, by economist Gabriel Galípolo.
TROUBLED WATERS
Guedes predicted “turbulent waters” at the Davos meeting due to rising prices worldwide. “Global inflation is rising, food and oil prices are rising. There are turbulent waters ahead,” the Brazilian minister predicted.
He said Brazil is comfortable to withstand the scenario due to the fiscal adjustment policies carried out by the Bolsonaro government but clarified that all of Latin America is “essential” to guarantee energy security for Europe and a good part of the world.
He also said Brazil is developing as an option toward the green economy with solar and wind energy growth. “We were left behind in the past, but we can grow with the new access: food, energy, green economy,” he concluded.
Guedes defended the position raised unilaterally within Mercosur to reduce import tariffs to generate a supply shock of extra-zone products to combat inflation in the domestic market, the largest in Latin America.
With information from El Observador