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Understand how the exchange rate drop affects the cost of living and the Brazilian economy
A Brazilian economy faces one of the greatest challenges of recent decades: the historical devaluation of the Real. In 2024, the Brazilian currency reached its lowest level in 30 yearsovercoming negative records since the creation of the Real Plan in 1994. This scenario not only worries economists and investors, but also has a direct impact on the lives of the population.
What led to this historic devaluation?
Several factors contributed to the fall of the Real, but the main cause is the government's fiscal imbalance. In 2024, central bank was forced to intervene several times, burning about $ 190 billion foreign exchange reserves, trying to contain the rise of the dollar. However, these actions proved ineffective, given the environment of crisis of confidence.
Furthermore, the lack of economic planning and the government's controversial statements have worsened the situation. According to experts, the contradictory messages and the inability to present concrete solutions have increased market distrust, accelerating the outflow of capital from the country.
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Impacts on the population
A devaluation of the Real has devastating effects on the purchasing power of Brazilians. With the dollar surpassing the R$6,19, imported products, such as food, electronics and fuel, became even more expensive. The high dollar also puts pressure on production costs in several sectors, which is directly reflected in inflation.
Another point of concern is the lack of incentives for domestic production. With labor undervalued and social services being prioritized, many workers stop looking for formal employment, choosing to remain in welfare programs. This reduces the supply of goods and increases prices, further aggravating the situation.
Consequences for investors
For the financial market, the devaluation of the Real represents a high risk. Foreign investors are withdrawing their resources from Brazil, seeking more stable and predictable economies. This capital flight not only reduces liquidity in the domestic market, but also increases pressure on the Brazilian currency, creating a vicious cycle.
For domestic investors, the situation is equally challenging. The high dollar makes import costs prohibitive, limiting the possibilities for investment diversification and business expansion.
What to Expect in 2025?
Experts predict that 2025 will be a year of severe adjustments. The recovery of the Real will depend on concrete measures to stabilize public accounts and restore market confidence. Priorities include controlling public spending, tax reform and strengthening the central bank as an independent institution.
However, with the pre-election year on the horizon, there are fears that the government will choose to increase spending, further worsening the fiscal imbalance. In this context, Brazilians will need to prepare for a period of uncertainty and possible worsening of inflation.
A historical devaluation of the Real is a direct reflection of structural problems in Brazilian economy. The fiscal imbalance, combined with the lack of confidence in the markets, puts the country in a scenario of uncertainty. The question remains: will the government be able to reverse this situation and restore economic stability in 2025?
The incompetence of this government is immeasurable! A country with every possibility of growth finds itself at rock bottom because of a gang that only thinks about spending public money uncontrollably without bringing any benefit to society. We only have two alternatives: remove this **** from power and try to recover the **** that this **** did or wait for us to become like Venezuela.
Are you still talking ****? The only lunatic is you defending **** and still using these false narratives from 2020. Turn the record over, indoctrinated ****.
Is it okay the way it is?
We should look at other indicators such as GDP growth of 4%, the lowest unemployment rate and reserves of 300 billion dollars. LULA was elected by people who were corrupt and he will not abandon his voters to serve the market.
Study a little bit of economics so you can understand the nonsense this government is doing. Artificial GDP growth through social incentives, unemployment rate that does not take into account social benefits, and only counts those looking for work. Rising dollar due to the credibility crisis caused by the government. The market is made by people and is not an institution.
Wow! What a pseudo-economist like Miriam Leitão can't do with a disorganized brain! Wake up! This supposed increase in GDP is due to exaggerated public spending and unemployment rates are also measured among informal workers who, according to the government, are unemployed. With the rise of the dollar, they have to look for work so as not to die of hunger, but the government doesn't show this.
Try to recover your vision, even the numbers you mention were manipulated at the IBGE. Wake up, with this idiot in power, Brazil will only sink.