After two quarters marked by growth rates near zero, the economy has slightly improved in the third quarter of 2019. Growth continues at a slow pace, but is slightly accelerated since the first semester.
] According to the IBGE, between July and September, GDP (gross domestic product) increased by 0.8% compared to the previous quarter – against growth of 0.2% between January and March and between April and April.
"We survived," sums up the economist Silvia Matos, coordinator of the Macro Bulletin of Ibre-FGV (Brazilian Institute of Economics Foundation Getulio Vargas). "This is not yet a wonderful growth, but it's reasonable considering what we lost, after a second quarter with a truckers strike and a difficult third quarter, which have deteriorated the international market and a disrupted electoral landscape. "
of GDP offset the negative impact of truck shutdown in the second quarter. According to Margarida Gutierrez, public accounts specialist and professor at Coppead / UFRJ, this recovery is likely to increase in the fourth quarter.
The reaction of the index of consumer confidence, trade and industry published this week by FGV corroborates this expectation. "
" But in the third quarter, the rearview mirror was a very bad time, marked by many uncertainties for the economy. I think the best prospects are for next year. "If there is a pension reform and if the international scenario does not lead to a crisis, we should increase by 2.5% to 3% by 2019."
This "if" conditions a greater momentum for growth in the realization of
The tone is cautiously optimistic for the coming year, pointing out that the reform will be the key to the future Jair Bolsonaro government and the virtuous circle promised by Paulo Guedes, economic guru of the retired military and his future Minister of the Economy.
Consumption and investment highlighted
In the GDP results for the third quarter, Silvia Matos, of the Ibre-FGV, highlights the best performance of household consumption, which increased by 0.6% compared to the previous three months, while she had changed by 0.1%.
The index remains low but indicates a slight recovery. in a key sector of the economy, which accounts for 60% of GDP. ” clbad=”img img-responsive image-large”/>
GDP is the sum of all goods and services produced in the country and indicates the pace of change in the economy – which should: increase by about 1.39% this year, according to the average estimates of the number of consultants and financial institutions badembled by the Central Bank in the Focus Bulletin. The best performance of household consumption is driven by a gradual improvement in the labor market, confirmed this week by IBGE, which said the seventh monthly decline followed the country's unemployment rate. The rate fell to 11.7% in October, but unemployment still stands at 12.4 million Brazilians – and this decline is attributable to the increase in the number of workers without a signed and self-signed contract, which reaches a record.
"Although of poor quality, we are seeing an increase in employment, income is rising, and this is helping to sustain growth in the consumption of families of goods and services," he said. estimating that, by the end of the year,
Another positive result is that of investments, which weigh about 20% of GDP, but in this case the increase is accompanied by A reserve.
From July to August investments rose 6.6% from the range from April to June – a significant recovery, the second quarter having decreased by 1.3% compared to the first, the first decline after a year of positive results [19659019] 104551972 gettyimages868865280-bfaf1a1fb6134151790bb905b63d564a.jpg ” clbad=”img img-responsive image-large”/>
However, the top corresponds to the inclusion of oil platforms already used in the country in the calculation made by the l 39; IBGE and can therefore give a wrong impression of new investment. "Excluding the increase represented by the platforms, the new investment should more or less offset the drop recorded in the second quarter," said Matos.
During the crisis, investments fell by about 30% and the reaction was rhythmic. slower than expected.
Challenges of the Bolsonaro Government
Growth remains sluggish in all areas, despite the slow pace of the recession that Brazil has experienced. According to the FGV Business Cycle Dating Committee (Codace), the retraction period lasted 11 quarters until the end of 2016 and corresponded to a decline of 8.6% of GDP.
"O The Temer government has managed to implement some difficult reforms, such as the spending ceiling and labor reform, and is trying to improve the situation ", said José Ronaldo de Castro Souza Júnior, director of studies and macroeconomic policies at Ipea. "
For Souza Júnior, Temer will transfer to Bolsonaro the economy in a better position than that inherited from the former president Dilma Rousseff
Bolsonaro will receive the country whose inflation is falling – and expects to close the year under the target of 4.5% – and Selic's interest rate to its lowest historic level, the current 6, 5 % per year
"Uncertainties related to the tax issue were an obstacle to a stronger recovery during this year," says badyst Ipea. "
Initially , the future president will benefit from the optimism that his election has aroused in the market. However, Souza Júnior believes that the moment is conducive to the expectations of investors and entrepreneurs who are considering the first steps of Bolsonaro.
Pension Reform
The challenges in balancing public accounts, however, are enormous. This year, the gap in government accounts is expected to be close to $ 140 million. Value is the difference between what the state collects with taxes and its expenses.
In recent years, the low level of economic activity has contributed to the account not being closed, thus canceling the collection. , economist and partner of 4E Consultoria, there will be no sustainable fiscal adjustment without a pension reform, as the government will have little leeway to reduce other mandatory spending. "The one that was to be cut easily the Dilma already cut, the Temer already cut," he says. ” clbad=”img img-responsive image-large”/>
"Reform is fundamental and must be done as long as the government has the political capital to do it," Jensen said. "It's going to lose popularity, but it's fundamental to do it the first year and reap the rewards." Otherwise, the next four years will be an increasingly serious crisis. , teacher at Coppead / UFRJ. "Without that, everything turns to nothing," he says.
Jensen sees "two layers of constraints" on the path of reform. First, he notes that Bolsonaro himself has made statements suggesting that it would not corroborate a very radical change – after recently pleading for the approval of the minimum age of retirement 61 years for men and 56 years for women [19659002] For the economist, this would give less significant results than in the version proposed by Michel Temer, which would fix respectively at the minimum ages of 65 and 62 years the age minimum pension for men and women.
According to him, the main obstacles will however be at the congress. "It will not be easy and it is unlikely that a pension reform will be as strong and robust as the country needs it," said Jensen.
"This is a delicate and unpopular question that will require many government negotiating skills." Several ministers, including Paulo Guedes and Onyx (Lorenzoni, future head of the Civil House) are beginning sailors without experience of these functions of political articulation. "
The future Minister of Finance, Paulo Guedes, recently said that the approval of a pension reform and a law to ensure the independence of the Central Bank later this year could ensure growth of 3.5% of GDP in Brazil as early as 2019.
After the second round, the efforts of the transition team publish measures on the agenda Congress at the end of the year has come to an end and the negotiations will be the responsibility of the next government.
Employment and Confidence Indexes
Unemployment figures, which now reach 12.4 million people, contribute to the population continuing to feel the crisis on its skin. For Jensen, maintaining the current pace of growth will not lead to major changes in this image.
"For unemployment to fall faster, GDP should increase more quickly" Making the diagnosis is easy, but doing (in fact) is difficult, "says Silvia Matos, of the 39. Ibre-FGV
"Making the diagnosis is easy, but doing (in fact) is difficult." Matos considers that the reforms are important for Brazil in strengthening an external scenario that promises to create difficulties up to 2019, with factors such as the trade struggle between the two countries.The US and China and US monetary policy, which should continue to raise its interest rate
"The outside environment is not very favorable, which has reduced our margin of error.
The Confidence in Trade Index (ICOM) rose by 6.9 points in November (compared to 92 in the first half of the year). 5 to 99.4), reaching its highest level since March 2014. The Construction Confidence Index (TICE) recorded its third highest consecutive level in November, reaching its highest level since January 2015. The Consumer confidence has the highest level since July 2014, with a rise of two consecutive months and reaching 93.2 points in November.
"We have already witnessed an easing of the future José Ronaldo de Castro Souza Junior, director of studies and macroeconomic policies at Ipea, said José Ronaldo de Castro Souza Júnior
Juan Jensen believes that the present moment has generated a positive expectation of the economy promised by Paulo Guedes and that his presence in the government has given rise to "some oba-oba." For him, however, this expectation still does not inspire a strong conviction – even because it is feared that the link between Bolsonaro and Paulo Guedes is finally
"Things are waiting to see where Brazil is heading. The first six months will be fundamental to see what the government will propose and what their implementation capacity will be. "
Have you watched our new videos on YouTube ? Register to our channel!
