The political environment in Brazil introduces uncertainty about the country’s economic improvement. The warning comes from economists who forecast modest gross domestic product (GDP) growth and somewhat controlled inflation, but with a high base interest rate for 2022.

DIÁRIO DO COMÉRCIO turned to economists to understand the situation of economic imbalance in the country. Currently, the cumulative inflation for 12 months is 8.99%. Since March, the figure, accumulated over 12 months, has surpassed the ceiling of the federal government’s inflation target of 5.25% this year. The Selic rate, according to the Central Bank, in August was raised for the fourth time to 5.25%.

Fundação Getúlio Vargas (FGV) economics professor Joelson Sampaio estimates that the second half has historically had good economic performance. “I believe that we will have an improvement in this economic recovery thanks to the progress of vaccinations and the increased flexibility of the population due to the reduction of social isolation,” he believes.

Although, FGV economist estimates inflation will be a major issue later this year, closing at around 7.6% in 2021. From the point of view of economist Joelson Sampaio, 2022 will be a year of low GDP “around 1% and inflation at a lower level than this year,” he adds.

Economist Paulo Kasaka of Ibmec predicts that the year will end with a GDP of 5%. “This increase is not because there was growth in the country. This is a reflection of the impact we experienced last year and the actions of this year, ”he explains.

On inflation, the Ibmec economist explains that behavior depends on a number of factors. “Political upheavals, devaluation of the real against the dollar, large investments leaving the country, water crisis, growing fuel supplies, a pandemic and the lack of structuring of a social program that actually helps more needy populations are affecting inflation in the country, which is expected to continue The outlook is that inflation will rise to double digits by the end of the year, ”says Kasaka.

Expectations for 2022 remain uncertain due to the political scenario. “We still don’t know what will happen next year. It is assumed that at the beginning of the year, GDP will grow by 1%, while inflation will average 3%. The central bank will have to raise the interest rate, mainly to contain the devaluation of the exchange rate, ”he said.

Paulo Casaca adds that until the political situation in the country is resolved, the economy will not return to the “rails”. “There are more important issues to be discussed in the government, such as the PEC dos Precatórios, where the financial resources will come from for the new Bolsa Família, a privatization that does not currently solve the country’s economic problems. the president of Brazil, ”he specifies.

institutional crisis

Mauro Sayar, professor of economics at the Faculty of Economics of the Federal University of Minas Gerais (UFMG), notes that the indicators are declining and show that with the “tone increase” of some authorities in the republic, the impact on the economy is inevitable. “We had a good prospect for closing GDP, but with a change in the political scenario, it is estimated that it will close at 5%.”

Sayar estimates that there is currently no way to reverse inflation in the short term and that there is an upward trend. Price escalation, exchange rate devaluation and political uncertainty scenarios are actions that the federal government could have avoided or bypassed within a year. “These actions were provoked by the authorities and could be canceled. Now pandemics, water crises, high fuel prices are actions that do not depend only or only on the government, they go further. These factors have also jeopardized the country’s economy. In addition, we still have the risk of Brazil, the ceiling of government spending, the dollar and the price of the increase in quotes and devaluation of our currency, ”he notes.

Economist Mauro Sayar believes that GDP for 2022 is still in a “foggy” scenario with a low growth estimate of 2.5% due to the political situation and mainly due to the water crisis in the country.with. “The central bank will have to act with interest to contain inflation. We will continue to depend on the political situation regarding the return on foreign investment, ”he explains.

Pochmann criticizes the lack of strategic projects

Brasilia “ Brazil needs to determine the foundations on which it wants to grow, and take into account the rise of Asia and especially China on the world stage, ” said Lula Institute President Marcio Pochmann, criticizing the lack of strategic projects for the country and a tax debate that ignores the transformation of the digital economy.

In an interview with Reuters, Pochmann defended the taxation of financial flows and criticized the concentration of economic debate on issues such as maintaining or not meeting spending ceilings. With regard to high inflation, the economist points out that the problem hides erroneous options for overly liberalizing economic policies.

A PhD in economics from the University of Campinas and one of the coordinators of the economic plan for PT’s candidacy for president in 2018, Pochmann said the current managerial and economic debate is focused on current issues, but avoids defining the north around. from which Brazil’s growth will be built.

“I don’t want to play down the problem of inflation, especially in a country like ours, but let’s stabilize inflation, so what? What’s going to happen now? Will the investment be spontaneous? Where? Which sectors? “, – he said.

Former President Luis Inacio Lula da Silva has publicly stated that he has not yet decided whether he will run in the 2022 elections, but his name has featured in the leaders of recent opinion polls.

Pohmann considered it important to define a country in which Brazil can be in the conditions of a shift of the dynamic center of the economy to the East, with a sharp jump in the relative importance of Asia and, in particular, China.

“The Brazilian economy seems to be in a coma and only responds to a prick. Release PIS / PASEP, there will now be Emergency Assistance, there will now be a preliminary version that augments the Bolsa Família. But this does not force the economy to turn around, it is a punctual recovery, and it returns to normal, that is, to a state of stagnation, ”he said.

According to Pochmann, Brazil is not producing what it needs and is increasingly dependent on the outside world, subject to exchange rate fluctuations, which ultimately affect prices in the economy. He advocated rebuilding the production system outside of primary agricultural production and building “grand projects” that would attract private sector investment.

The idea, he continued, is to take advantage of liquidity, which is now abundant, but mostly directed towards government bonds.

Asked how to contribute to this change in an environment where long bond rewards are more attractive amid doubts about the country’s real commitment to financial soundness – a situation that tends to worsen as elections approach – he pointed out that this could be resolved by political agreement …

“This is a political agreement that some will accept, others will not, but reality will force the country to unite around this point of view,” he said, without going into details.

“We’re talking about a hybrid economy here. I do not believe in a strong state and a weak private sector and vice versa. It is convergence, and, in essence, it presupposes a horizon in which politics must be resolved in the face of an existing impasse. We are at a dramatic impasse, since 2014 there has been no growth in per capita income in Brazil, this has never happened in the history of the country, ”he added.

Inflation – Regarding the accelerated growth of prices in the economy, the economist noted that the country is experiencing cost inflation, caused, in his opinion, by economic policy options.

Echoing a recent speech by Lula, who attributed the rise in inflation to Petrobras’ policy of selling gasoline at dollar prices, Pochmann said the central bank is acting “like a fireman of sorts, as the government itself caused the increase. Macro prices are obviously a matter of fuel and, at the same time, electricity. “

“On the other hand, food prices reflect the abandonment of any supply policy, food security and a growing dependence on world prices. And, obviously, the manufacturer wants to earn more, so if he has an alternative in the foreign market, why is he going to leave it in the domestic market? “Pochmann said.

According to the economist, the country should have regulatory reserves as part of agricultural policy that will finance producers.

“This is state policy, this is the state. But no, the state is in the way, it is corrupt. So don’t. But if this does not happen, we will return to the starting point, ”he said.

“The state is part of the problem, but the state is also part of the solution. This does not mean that the state should be the way it was before, it is a digital state, and not an industrial state of the past, ”he added. (Reuters)

Digitization can be an ally in taxation

Brasilia – Lula Institute president Marcio Pochmann has defended that with the digitalization of the economy, even the accelerated Covid-19 pandemic, the country should tax financial flows that are easy to track.

“The situation of companies can be monitored, for example, only through financial flows. Obviously, taxation can be done in this way, and not in the way we do today, in an archaic system that emerged with the arrival of the Portuguese invoicing, it is not in dialogue with the fact that we live in a digital economy. In this decade, the currency as we know it may disappear, ”he said.

It has been asked whether this idea would be similar to that of the former Minister of Revenue, Marcos Sintra, who tried in the government of Jair Bolsonaro with the support of Minister Paulo Guedes to introduce a single tax on payments that would be levied on all economic transactions, in return.With regard to declarative taxes, Pochman stated that both of them are “on the same level”, but he does not give up the tax difference.

“Perhaps my difference from him (Cintra) is that he worked with only one tax. I work with the vision that there is such inequality in the country, such different sectors, families, that it justifies the diversity of taxation, ”he said.

The form of levying ICMS, IPI and even income tax today depends on declarations that can be canceled, the economist said.

Pochmann also said that Brazil should focus on creating wealth in areas that it pays little or no attention to, starting with space exploration, in a reality in which the largest global companies are now working with data.

“There is no GPS in Brazil. How can we say that Brazil is an autonomous country when its entire information and communication system related to outer space, and therefore to the Internet, depends on non-Brazilian companies? “, – he said.

“Facebook even turned off the President of the United States, he can turn off the country. If we get into a conflict, I hope never, but whose adversary is the United States, they will simply cut us off from the satellite. Let’s imagine Brazil without internet. Hardly a single plane takes off. How is the hospital, university? This is a strategic issue, ”he added.

Brazil also needs to focus its strategic planning on exploration in deep waters, relying on Petrobras’ expertise, and on tackling climate change, given the reality of different biomes, Pochmann said.

“Amazon is practically Brazil’s gateway to the 21st century if we know how to take advantage of it,” he said. “It could be an excellent industrial laboratory for the production of technologies related to biome diversity.” (Reuters)