Wednesday , January 29 2020
Home / brazil / Country lost strength to grow, and new social security is not enough, says professor – 06/15/2019

Country lost strength to grow, and new social security is not enough, says professor – 06/15/2019



[ad_1]

Brazil has lost its capacity to grow since the last quarter of 2014 and, so far, there is no sustainable expansion. Gross Domestic Product (GDP) increased by 6.9% between 2015 and 2016, and by only 1.1% per annum in 2017 and 2018.

In order to recover, the country would have to take some measures and even then it would take at least a year to grow 1% or 2%. Only the pension reform would not be enough. The evaluation is by Antonio Corrêa de Lacerda, Professor and Director of the Faculty of Economics of PUC-SP (Pontifícia Universidade Católica de São Paulo).

The ones they need are needed for Brazil to recover its capacity to grow:

  • Expanding public investment
  • Improve the supply of credit and financing
  • Stimulate employment and income-generating sectors such as construction and manufacturing

I do not believe in the fairy of trust. This is to overestimate the effect of pension reform
Antonio Corrêa de Lacerda

According to him, the government's hope for reform strength to give confidence to economic agents (investors, entrepreneurs, public entities and consumers, among others) is exaggerated.

Additional measures would take 1 year to grow 1%

"If the measures I am reminded that unfortunately were not part of the government's economic team will grow in the second half of the year, the result was residual. So, as the first half has already been lost, Think it would be a slight reaction in the second half of the year and, consequently, GDP in 2019 would grow by no more than 0.5%

The problem is that the government's economic agenda is a samba of one note: that of the pension reform
Antonio Corrêa de Lacerda

"I think a more significant result, if these measures were implemented later this year, would be achieved only in 2020, with economic growth between 1% and 2%," he said.

GDP should grow by a maximum of 0.5% this year

Laxda forecasts economy growth in this year from a maximum of 0.5%. For the Puk-Sp professor, the second quarter GDP also tends to be negative or at most close to zero.

No growth for the Brazilian economy this year will depend on the performance of the second half, which, in my opinion, has more to do with the economic environment than with the social security reform resolution
Antonio Corrêa de Lacerda

Unemployment should be fired soon

In addition to the need for development policies, Lakerda mentions some of the problems that need to be addressed urgently, such as high unemployment and the fear of being unemployed.

According to IBGE (Brazilian Institute of Geography and Statistics), unemployment reaches 13.2 million people. However, in a broader concept, consider the total of discouraged and underutilized people, the universe is 28.4 million people.

Anyone who has a job has handbag pulled because the school bills, condo bills and health plan have increased. Not enough to consume what is not absolutely necessary
Antonio Corrêa de Lacerda

High interest rates are another problem

In addition, the professor cites the lack of credit, which is already expensive for both businesses and consumers. Lacerda said that while there is room for the central bank to reduce the Selic rate (today's interest rate at 6.5% a year), the problem is not that, but the final interest rate for the consumer.

"That is, the place for the growth of the economy is limited. No measure that could be taken after the pension reform was approved still takes time to start having an effect," said the professor. "Assuming this happens, the effect will only be seen in the fourth quarter."

Optimistic consultancy now sees little GDP

Australia's rating, one of the consultants that got more optimistic about the economic team nomination made by Yer Bonsonaro shortly after last year's elections and the congressional renewal, lowered the 3% GDP estimate made in October to 1, 9%. But, now, cut them to 1% and downward.

At the moment, we hold the 1% growth perspective for GDP this year, but in the second half of Savior's condition, which, in part, would come with the pension reform approval.
Austin Agostini, chief economist at Austin's rating

For him, the approved social security reform would allow the recovery of economic agents. However, according to Agostini, this would have to fall most until the end of July, otherwise it will not give time to make the economy reaction.

The reaction could save 2019 growth, but preliminary figures on the economy, such as the first quarter GDP drop, for example, do not allow us to reject growth of just 0.5% this year
Alex Agostini

Economy thwarted all expectations

Tendências is another consultancy that has maintained its GDP growth rate of 2% until the end of April this year, but has now revised it to 0.9%.

Since the end of the first round of elections last year, we have been expecting a 2% GDP growth projection. But there is nothing left to stop
Thiago Xavier, economist at Tendências consulting

For him, the economy did not hit and frustrated all possible expectations. It uses structural and conjunctural problems.

Structural factors:

  • Debts of countries and municipalities
  • Federal government accounts
  • Legal ties (preventing, for example, privatizations)
  • Golden rule (mechanism that prohibits the government from making debts to pay expenses such as wages, retirement benefits)
  • Lack of support for major economic activities such as construction

Short-term reasons:

  • World economy should grow less
  • Business Transactions affected by this global economic slowdown
  • Argentina's economic crisis (third largest trading partner in the country)

Entrepreneurs are less secure in government

The honeymoon of the businessmen with the government is over
Thiago Xavier

FGV (Fundação Getulio Vargas) has risen to a sharp decline in business confidence index (ICE), which fell to 91.2 points in May, the lowest since July 2018 (90.7 points).

The indicator is calculated based on business interviews with industry, services, trade and construction sectors. According to the FGV, business confidence fell by 6.9 points since January (98.1 points).

On the importance of reforms, such as the Social Security and Tax Reforms, he said they were essential, but insufficient for the economy to grow in a sustainable way.

According to him, if the dollar continues to rise, this will certainly generate inflation, and the central bank will raise interest rates, leading to more malaise and pessimism.

Who would invest in this context?
Thiago Xavier

Understand what GDP is and how it is calculated

Contact Us |

[ad_2]
Source link