As optimistic as it is, there is no way to imagine that the Brazilian economy will recover under the current government. The president plays against. Do not think. When he says what he thinks, he shows that he doesn’t think. Economy Minister Paulo Guedes, once seen as a development guru, is nothing but a seller of baseless optimism. Live (or pretend to live) in a fantasy world, where Brazil is taking off. Roberto Campos Neto’s independent Central Bank is serving almost nothing. Economic stability went to the swamp, the exchange rate fuels the metastasis of inflation and prices rise as in times of war. Raising interest rates and irrigating the market with reserves have been as ineffective as a worm remedy against Covid. They are placebos for the terminally ill. BC has become a factory of reports and projections that never come to pass.
Is the pandemic to blame? In part, yes. Is it the responsibility of governors? Of course, everyone has their share of responsibility. Are the problems coming from outside? Some yes. But the perfect storm in the economy is mainly the result of the incompetence of Jair and his gang. They are bad at what they do, what they say, what they think. There are astronauts in science with zero budget. There are health ministers, without health, who do not advocate vaccines so as not to hurt the boss. It has a Human Rights minister who appears to be unaware of what human rights are. There is a Minister of Communications who misinforms more than he communicates. When everyone joins the leader, it’s time to get the kids out of the room.
By analyzing the micro individually, it is easy to understand the macro. That’s where the thesis that the economy, like the rest of Brazil, will not go out of place. This Friday (15), the popularly known “monthly GDP proxy”, the economic activity index of the Central Bank (IBC-Br), presented an expansion of 4.7% in August, in the annual comparison, the equivalent of a contraction of 0.15% compared to the previous month. The market, according to data collected by Bloomberg, predicted a -0.08% retraction. The index was hurt by the declines in industry and retail in August, but partially offset by the positive performance of the services sector, which continues to benefit from the optimism regarding vaccination and the gradual reduction of social isolation measures.
For next year, the prospect of still high unemployment and the anticipation of monetary adjustment should weigh negatively on investments and on the economic recovery. The scenario is that the problems will continue until at least the middle of next year. The meager 1.54% GDP growth in 2022 (Focus Bulletin) is already under review to 1.2% or 1.3%. The lack of raw materials, the lack of control over inflation and the uncertain environment in the political field make the country a constant source of instability. In other words, the fantastic factory of good news only exists in Guedes and Bolsonaro’s minds. The reality is different. If you are used to ups and downs and now believe in economic recovery before 2023, it is better to get used to it.
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