Economy will decide election, Abilio Diniz says
Abilio Diniz sees the economy as the central agenda of the candidates for the Presidency of the Republic in 2022. About to turn 85 on the 28th, when he will be traveling with his family to Aspen, Colorado, Mr. Diniz sees viability in a third way project for the country - and believes that former President Luiz Inácio Lula da Silva will move towards the center in the political spectrum. Without declaring his vote, Mr. Diniz says he will not support any candidate. Not even his son-in-law, Luiz Felipe d’Avila, from the New Party (Novo)."I intend to analyze all the economic plans and offer my opinion about them. Bolsonaro will have Paulo Guedes [as Economy minister], Sergio Moro has Affonso Celso Pastore, who is a great name and was an awesome move [of Mr. Moro to approach him], João Doria with [Henrique] Meirelles. Lula I don’t know yet."Although he rarely attends political lunches and dinners, the businessman went on Friday to meet Economy Minister Paulo Guedes, who had lunch in São Paulo at an event organized by Esfera Brasil, a group created by businesspeople to discuss economic and political matters. "I went to give Guedes a hug." Mr. Diniz is not anymore among businesspeople pessimistic about the government - "I used to publicly criticize it, but what’s the point?" - and is against the "wrong tendency of only seeing the glass as half empty." He cites, for example, that even though Brazil is cheap on the stock exchange, companies have not lost their fundamentals.Founder of investment holding Península and shareholder of Carrefour, Mr. Diniz saw a decade ago the beginning of a difficult merger talks between GPA and Carrefour, which fell apart, and today he analyzes the stage of the companies. He also says that the French group is analyzing global partnerships and dismisses rumors about Alexandre Bompard leaving the post of global CEO of Carrefour. Read below the main excerpts from the interview.Valor: Did you attend Paulo Guedes’s lunch held by Esfera on Friday to support the Economy minister?Abilio Diniz: You have to support Paulo and the people who are working for Brazil. You can say whatever you want, but they are working for the country. If they are making mistakes, maybe people make mistakes. The idea of his economic plan is consistent and was the best for Brazil at this moment. Did some things get out of control? This happens. If there is something that is going well in Brazil, it is the economy.Valor: Do you really think so, even with the technical recession, inflation and interest rates going up?Mr. Diniz: Inflation is high around the world and it is an inflation of costs, of supply, not of demand. It is much more difficult to work with inflation of supply. We lack inputs to produce here. And who in the world is not facing inflation problems today? Look at the United States, which just announced an [12-month] inflation of 6.7%, and the last time [it was so high] was during the oil shock a few years ago. The United States doesn’t have an indexing mechanism and exchange rate effect as we do.Valor: But we are among the countries with the highest inflation.Mr. Diniz: What is accelerating our inflation is our exchange rate, which is highly misaligned. The classic interest rate mechanism works, but it is not so efficient, because the problem is that supply inflation is harmful to the economy.Valor: And why do you think the exchange rate is misaligned? Is political instability one factor?Mr. Diniz: You formulate policy and you get the results. The macroeconomic fundamentals lead to an exchange rate that is what we call relative prices. Why do we have an exchange rate with a weakened real? By the flow, money is only going out and not coming in. The worst thing for businesspeople is a volatile exchange rate. It may stop...
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