The Brazilian economy is gradually migrating towards a new macroeconomic equilibrium whereby the private sector is gaining a larger role in the allocation of resources. This transition is the result of a changing conception of the role of the state but also stems out of a necessity to consolidate fiscal accounts. The nature of the fiscal adjustment however has had knock-on effects on both public and private investment, with adverse consequences on the recovery and medium-term growth prospects. The recent disruption to the economy resulting from the Covid-19 pandemic has also reset the deck with regards to the outlook for corporate investment and potential output
