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Significance

Brazilian financial markets have for months reacted to the daily political developments affecting the chances that Congress will pass an ambitious pension reform, which the government has set as its top priority. However, while addressing the yawning pensions deficit is a necessary step to restore the country’s dynamism, it is no silver bullet. Alone, a successful reform cannot put the economy back on track.

Impacts

A brain drain could further hit the economy in the coming years.

Persistently low productivity bodes ill for a rapidly ageing society.

Extremely high inequality will dampen the vigour of the domestic consumer market.

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