BMG Bank Director Said Brazil Must Put The Economy Back On Track

Brazil is going through a major economic change, and it is having an impact on the people, the government, and the banks. In fact, no one is immune in Brazil. The currency has lost more than 30 percent of its value in 2015, inflation is pushing 10 percent, and the government of President Dilma Rousseff is in serious trouble. But, Marcio Alaor, the Vice-President and Director of BMG Bank thinks the country is making progress on monetary and fiscal issues. Even though the economy is in a zero growth mode, Alaor said BMG bank is having a very good year.

One of the main reason for the profits that some banks are generating in Brazil is the high-interest rate. BMG is one of the leaders in the consignment credit arena in Brazil, and the high-interest rates along with the demand for payroll loans are producing excellent returns for BMG and other banks.
Alaor also said that the macroeconomic stability of the country has been the main ingredient in the success of Brazil in the past, and that must continue in order for Brazil to recover. But that is easier said than done because Brazil’s main trading partner, China, is not fueling the stability of exports like they have in the past. Alaor thinks there must be some major structural reforms put in place to close production gaps that Brazil is experiencing with other emerging markets around the world.
According to BMG Bank President Ricardo Guimarães, raising productivity is essential for the economic growth of Brazil going forward. Alaor added that reforms must also be made in the indirect tax system, infrastructure, and there should be a stronger emphasis on international trade with other countries. The BMG Bank executives think China will not be back in the market next year, and that means the country must raise productivity and improve incentives to attract other countries.
Brazil will also need to cut back on public expenditures, and the government must reform the pension plan, according to Alaor. BMG Bank has been a leader in helping the poor, but the government must do more in that area rather than focusing on the newly formed middle class. If the government starts to address the inequality that exists in the country, Alaor thinks it could strengthen the public finances if the program is designed correctly.
The executives at BMG Bank know that Brazil’s economy goes through cycles, and this one won’t last forever. Brazil will be back in a growth mode, but it may take a couple of years for the country to fully recover.

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