Experts say that government measures can impact the economy, as long as they effectively reach the population
The reconstruction process in Rio Grande do Sul should boost some sectors of the economy, especially civil construction and the home appliance trade, according to experts consulted by the Power360.
The need to rebuild homes destroyed by the floods should increase the search for construction materials. These products should also be in demand for repairing roads damaged by the impact of rain, according to Luiz Afonso Senna, engineering professor at UFRGS (Federal University of Rio Grande do Sul).
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For Senna, this search for construction products should increase the price of this sector in the State. Despite this, inflation should not have a considerable effect on the rest of Brazil: “Even though there is a large demand for construction, it is not something that has a very dramatic impact on the country’s sectoral inflation”.
The most sought after products for reconstruction are: concrete, steel, bricks and ceramic blocks. The analysis was carried out by professors Angela Masuero and Denise Dal Molin, from the UFRGS school of civil engineering.
The teachers claim that some inputs may be insufficient to meet the State’s demands, as the transport infrastructure has been damaged, as well as the mines that contain the substances necessary to produce the material. This impact should initially come in the short term.
For them, one solution adopted will be recycling and the search for other materials to create the products necessary to create traditional products.
“In making concrete, we use cement, sand and crushed stone. There are already many studies that prove the use of recycled aggregates to replace natural sand and gravel”they say.
WHITE FABRIC PRODUCTS
Regarding white goods, Senna says that the demand for essential household appliances damaged by the floods will require replacement of these items. They include blenders, washing machines and refrigerators, for example.
“Houses lost stoves, their refrigerators. The entire so-called white goods industry will end up being a benefiting sector. All industrial sectors that are in people’s homes and that need to be replaced will somehow have a certain greater consumption”he stated.
The creation of jobs and the movement of sectors, however, is not enough to compensate for the economic losses resulting from the entire disaster in Rio Grande do Sul, according to experts.
“The losses happened only once. Economic activity will be impacted over time […] People died. Some businesses died too. Production fell. The balance continues to be negative”says Luiz.
GOVERNMENT MEASURES
Senna says that government measures have the potential to boost the economy, but only if the actions actually reach people and companies. As shown by the Power360the commercial sector assesses that advertisements are often insufficient and do not arrive.
The president of Fecomércio from Rio Grande do Sul, Luiz Carlos Bohncriticized the measures to extend tax payments.
He mentioned that the State’s economy was widely affected and that many companies were expected to be out of business for 1 to 2 months. For him, the Rio Grande do Sul It will only be able to rebuild easily with non-refundable money, that is, with loans without payment obligations.
“Nothing got off the ground, nothing became an act. [Medidas] announced actually exist, but nothing effective. We are anxiously looking for resources to start the recovery”he said. “We need money”he stated.
Watch the interview with Bohn (35min54s):
Senna agrees with this assessment. For him, it is not only necessary to announce measures and advertise, but to organize the actions so that they are effective: “The best thing the government can do today is to disrupt as little as possible and, where it can help, be as efficient as possible”.
One of the measures that can cause damage, if not carried out efficiently, is the postponement of tax payment deadlines. If companies have not recovered, there may be an accumulation to pay later and increase the loss.
This consequence would have the potential to especially affect small businesses that do not have sufficient cash flow to accumulate debt.
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