Campos Neto praises Milei and sees Brazil well positioned in relation to US tariff

Former Central Bank president Roberto Campos Neto participated recently with the event of the Farm Capital in São Paulo, in which he made considerations about the domestic and global economic scenario. In the evaluation of the former central banker, Brazil is “well positioned” in relation to the tariff policy of US President Donald Trump and needs to maintain a tone of neutrality with the White House, seeking negotiations.

“Brazil is not the focus of the problem that the United States see. I think Brazil has done a good job,” said the former BC president. “Brazil has to be as neutral as possible and not enter this fight,” he amended.

Among the possible consequences of the US and China trade war for the country, Campos Neto mentioned that there may be a “invasion” of Chinese products in Brazil, given the closure to the US market. “This brings misinflatiality pressure,” said the former BC, punctuating, however, that it is necessary to analyze what effect this movement will bring to the national industry.

Still on tariffs, Campos Neto said that, according to economic literature, it is difficult to believe that the effect of measures like this is that of encouraging local industry in the country that raises tariffs or increased collection.

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In drawing a broader overview of Brazil, Campos Neto considered that the departure to the country goes, among other things, through a “positive shock” in fiscal policy. In this area, he argued that there must be a review of social spending from, for example, mechanisms that guarantee a “output door” to beneficiaries of some programs. “We need a review of the size of the public machine, with digitization generating efficiency to be able to spend less,” he added.

The former BC president also pointed out that the global inflation observed in the period after the pandemic was a much more linked problem to the warming of the demand, due to the expansion of the payment of social benefits, than regarding a matter of supply.

Campos Neto also said that he could not comment on recent decisions of Brazilian monetary policy, because he is in the quarantine period after leaving the municipality’s command, but that the monetary authority has done a “correct work” in the short term.

Asked how he evaluated the economic policy of Argentina’s president, Javier Milei, Campos Neto pointed out that the neighboring country’s agent opted for a “strong and unpopular” adjustment, but it seems to be on the right track and may be starting to work. “There was a very strong contraction of the economy last year, but at the end now it seems that it is going up,” said the former central banker, noting, however, that Argentina still has questions to be resolved, especially the exchange balance.