BRASILIA, July 18 (Reuters) – Brazil’s Economy Minister Paulo Guedes said on Monday that the world economy is entering a period of stagflation, which will be “much more serious” than initially imagined.
Brazil, on the other hand, is going in the opposite direction, as it has seen economic growth with falling inflation and lower unemployment, the official said at the inauguration ceremony for the new head of the country’s market regulator CVM.
“We are going to see the economic universe in contraction, but Brazil is in the other direction,” he said, noting that the country has its own growth dynamics.
The ministry revised its outlook for GDP growth this year to 2%, from 1.5% previously, thanks to stronger economic indicators since May, an improvement in the labor market and a rise in private investment.
According to Guedes, the country should benefit from the reconfiguration of global production chains after the war in Ukraine, and more investment will come to Brazil as operators seek a safe haven.
The minister also said that the government is working to approve “soon” the tax exemption for investments in fixed-income assets.
The minister told Reuters the move entails an income tax exemption for foreigners investing in domestic corporate bonds, news first reported by Reuters in February.
Foreigners currently pay a 15% tax on capital gains from local private sector bonds, but are exempt from the tax when they invest in Brazil’s stock market and public debt.
Brazilians pay an income tax rate of 15% to 22.5% on corporate bond yields, depending on how long they are held.
The government supported inserting the measure into a bill modernizing credit guarantee legislation, which still needs senate approval.
(Reporting by Marcela Ayres; Editing in Spanish by Ricardo Figueroa and Marion Giraldo)
–
