In the course of 2019, the name of the president right from Brazil, Jair Bolsonaro, has reverberated around the world: by denying the fires in the Amazon, by silent about the human rights abuses in your country or by your provocations to those who would criticize them for their positions against the environment, the press, or the minorities. With Leonardo DiCaprio, Emmanuel Macron and Greta Thunberg as targets of their invective, Bolsonaro has put energy in to promote insults, in a narrative that puts well in evidence. However, when their partners are businessmen, the president of the brazilian shows his softer side. “You are true heroes,” he said in one of his recent speeches to the ecosystem, national corporate, which has promised to make life easier so that you can invest and thrive. “If they find any decree to place the difficulties, to come to us so that we change it if necessary.”
In the battle between the economic development of Brazil and the global concern for the preservation of nature, the agent of brazilian has been chosen clearly for the first side: Bolsonaro, in fact, has practically been governed for the private sector in their first year, applying reforms to make life easier for the business world. You are not alone: in the brazilian Parliament, which premiered along with him in January of last year, today there is a majority of politicians with an eye on the economy, trying to reduce constantly the role of the State and encouraging the action of the companies. That understanding between the Executive and the Legislature, secured the passage of the much-disputed pension reform, a battle that seemed lost decades ago.
The brazilian economy slowly comes out of a long phase of lethargy. Moves a dropper, yes, but enough to test a recovery and mark the distance with the recession suffered in 2015 and 2016. In 2019 the growth of the south american country will be close to the 1%, and this year, since it is assumed that the expansion will exceed the 2%: a powerful ball of oxygen for Brazil after almost a decade of recession and political crisis. “Our plan was to grow by 1% this year. Now we want a 2% in 2020, a 3% 2021 and 4% 2022,” said recently the minister of Economy, Paulo Guedes.
The right-hand side of Bolsonaro for everything related to finance has a reform agenda in mind for the next year, including a tax office and other administrative, within a plan to reduce the bureaucratic maze that puts Brazil in a bad position in the index of ease of doing business World Bank. Guedes is prepared, in addition, to privatize hundreds of state companies, ranging from technology companies to Government at the company of generation of energy (Eletrobras) —this last, still pending approval of the Congress. Also hurry a new legal framework to expand private investment in basic sanitation, which promises an inflow of funds of 155,000 million euros until 2033, and more strength to the sector of infrastructures, paralyzed from 2014, when the operation against the corruption Lava Jato reached to the developers.
GDP
of the last 20 years
In %
The challenge of Brazil is to break the low ceiling.
of growth
Forecast
IMF
8
7.53 ami
7
6
5
4
3
3
2,26
2
1
0,87
0
0,34
-1
-2
-3
-3,55
-4
1998
00
02
04
06
08
10
12
14
16
18
20
22
24
GDP
Industry
In %
In %
2,2
2,2
1
-0,7
2019
2020e
2019
2020e
(e) estimate
Balance
commercial
Inflation
billions
dollars
In %
3,7
3,6
45
26,1
2019
2020e
2019
2020e
(e) estimate
Export
Imports
billions
dollars
billions
dollars
224,4
217,3
191,2
179,2
2019
2020e
2019
2020e
(e) estimate
Evolution of the Bag
Index Bovespa, in points
120
115
110
105
100
95
90
115.645,3
Jan.
Mar.
May
July
Sep.
Nov.
Unemployment
annualized Rate. In 2019 the data are
the third quarter. In %
12
12
10,4
10
9,5
9
8
6,8
6
4
2
0
2012
13
14
15
16
17
18
19
20
21
22
23
Forecast by the IMF
foreign Trade
billions of dollars
350
Exports
300
310,5
Imports
250
249,2
200
217,2
150
Balance
commercial
153,2
100
64
61,3
50
2017
18
19e
20e
21e
22e
23e
24e
public Debt
In % of GDP
2017
2018
2019
2020
2021
2022
74,0
77,2
78,2
79,0
Forecast
IMF
79,5
79,6
Evolution of the currency
dollar for real
0,28
0,27
0,26
0,25
0,24
0,23
0,2481
January
March
May
July
Sep.
Nov.
Source: Central Bank of Brazil, IMF Survey
Focus and IBGE
THE COUNTRY
GDP
of the last 20 years
In %
The challenge of Brazil is to break the low ceiling.
of growth
Forecast
IMF
8
7.53 ami
7
6
5
4
3
3
2,26
2
1
0,87
0
0,34
-1
-2
-3
-3,55
-4
1998
00
02
04
06
08
10
12
14
16
18
20
22
24
GDP
Industry
In %
In %
2,2
2,2
1
-0,7
2019
2020e
2019
2020e
(e) estimate
Balance
commercial
Inflation
billions
dollars
In %
3,7
3,6
45
26,1
2019
2020e
2019
2020e
(e) estimate
Export
Imports
billions
dollars
billions
dollars
224,4
217,3
191,2
179,2
2019
2020e
2019
2020e
(e) estimate
Evolution of the Bag
Index Bovespa, in points
120
115
110
105
100
95
90
115.645,3
Jan.
Mar.
May
July
Sep.
Nov.
Unemployment
annualized Rate. In 2019 the data are
the third quarter. In %
12
12
10,4
10
9,5
9
8
6,8
6
4
2
0
2012
13
14
15
16
17
18
19
20
21
22
23
Forecast by the IMF
foreign Trade
billions of dollars
350
Exports
300
310,5
Imports
250
217,2
249,2
200
150
Balance
commercial
153,2
100
64
61,3
50
2017
18
19e
20e
21e
22e
23e
24e
public Debt
In % of GDP
74,0
2017
2018
2019
2020
2021
2022
77,2
78,2
79,0
Forecast
IMF
79,5
79,6
Evolution of the currency
dollar for real
0,28
0,27
0,26
0,25
0,24
0,23
0,2481
January
March
May
July
Sep.
Nov.
Source: Central Bank of Brazil, IMF Survey
Focus and IBGE
THE COUNTRY
Evolution of the GDP of the last 20 years
In %
The challenge of Brazil is to break the low ceiling of growth
Forecast
IMF
8
7.53 ami
7
6
5
4
3
3
2,26
2
1
0,87
0
0,34
-1
-2
-3
-3,55
-4
1998
00
02
04
06
08
10
12
14
16
18
20
22
24
GDP
Industry
Inflation
In %
In %
In %
2,2
3,7
3,6
2,2
1
-0,7
2019
2020e
2019
2020e
2019
2020e
(e) estimate
Balance
commercial
Exports
Imports
In billions
dollars
In billions
of dollars
In billions
dollars
224,4
217,3
191,2
179,2
45
26,1
2019
2020e
2019
2020e
2019
2020e
(e) estimate
Evolution of the Bag
Index Bovespa, in points
120
115
110
105
100
95
90
115.645,3
January
March
May
July
Sep.
Nov.
Unemployment
annualized Rate. In 2019, the data are for the third quarter
In %
12
12
10,4
9,5
10
9
8
6,8
6
4
2
0
2012
13
14
15
16
17
18
19
20
21
22
23
Forecast by the IMF
foreign Trade
billions of dollars
350
Exports
300
310,5
Imports
250
217,2
249,2
200
150
Balance
commercial
153,2
100
64
61,3
50
2017
18
19e
20e
21e
22e
23e
24e
public Debt
In % of GDP
2017
2018
2019
2020
2021
2022
74,0
77,2
78,2
79,0
Forecast
IMF
79,5
79,6
Evolution of the currency
In dollars for real
0,28
0,27
0,26
0,25
0,24
0,23
0,2481
January
March
May
July
Sep.
Nov.
Source: Central Bank of Brazil, IMF, Survey Focus, IBGE
THE COUNTRY
The companies have little faith in the ability of the Government Bolsonaro to fulfil its promises, after you have untied some knots that seemed eternal, as the agreement between the European Union and Mercosur, closed at the end of June. The announcement that the two blocks they had finally reached a consensus and made it clear that the opening of Brazil already is not a reality so distant. “This compels us to think bigger,” says José Augusto Castro, president of the Association of Enterprises of Foreign Trade (AEB). Their projections favorable go beyond the year just released, when it is expected the ratification of the agreements are specific between the two blocks. The president of Citrus, Ibiapaba Net, which represents the producers of orange juice —Brazil is, by far, the first producer in the world, will also be encouraged. “We closed an agreement with problems and imperfections, but of a breadth-giant that brings us to a promising future”, he says. “From the commercial point of view, this Government is the most pragmatic we’ve had.”
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Castro, of the AEB, trust other promises made by the team of Guedes, as the tax reform and administrative. “All of these policies are going to reduce costs for businesses and will make them more competitive,” celebrates the representative business, which came to fear that the rhetoric of aggressive Bolsonaro against China in the past could affect the business with the asian giant. In campaign, the right-wing loaded repeatedly against the country. “China”, he said then, “don’t you want to just buy in Brazil: want to buy to Brazil.” The messages were the main trading partner of the south american country at a time when the trade war with the U.S. began building and Bolsonaro was increasingly close to Donald Trump. Once in the presidency, however, was modulated his speech. “China is, increasingly, a part of the future of our country”, he said, since last November, in a meeting with president Xi Jinping.
despite his rhetoric aggressive, Bolsonaro has learned the formula to keep always happy entrepreneurs. The latest polls show a 60% approval among the executives of companies, for whom the pension reform, which concluded in October, has been music to your ears when you open a horizon of long-term public expenditure to be more controlled. “This has brought calm to those companies that dare to invest a little bit more”, adventure Marcelo Lico, a partner of the Crowe Audit. Lycus had to postpone the December holidays to meet the increased demand arising from new projects from their clients with the sunset view in the next decade, projections that have led you to expand in 40% of their team. “It will certainly be a tremendous year”, confides the businessman. Like him, most people understand that Brazil is on the right path.
Some facts and numbers are starting to support optimism in the early stages. Sectors that were unemployed, as the civil construction starts —slowly, yes— to generate jobs. The sales last Christmas were the best of the past seven years, with an increase of about 5% with respect to 2018, according to data from the National Confederation of the Trade. The Government gave strength to the improvement of private consumption, with the release of the resources of the Guarantee Fund for Time of Service (a compensation to the worker only had access in the event of dismissal or for the purchase of a home). This movement injected around 7,000 million euros in the second half of 2019. Added also the action of the central bank with the lowest interest rates in history —which went from 6.5% to 4.5% in the course of the year. The median always had surpassed the barrier of 10% until 2017 —and 30% in the decade of the nineties— with some exceptions in the years of Dilma Rousseff (2011-2016).
a very precarious
Collection of cocoa in the State of Bahia, eastern Brazil. RAFAEL MARTINS (AFP)
Also the employment is recovered in the final stretch of the year, after the fall registered in the first half. November closed with 33.4 million workers on staff, with an increase of almost 400,000 formalized between September and November. However, there is still almost 25 million self-employed people, often in precarious conditions, and other 11.8 million work without a contract in the private sector. In total, 38.8 million informal, according to figures from the Brazilian Institute of Geography and Statistics (IBGE). And even after the improvement of the end of 2019, as the unemployment continues to strike at 11.9 million brazilians and informality continues to affect more than four of every ten workers (using the definition of employed persons, which includes those who are employees, as a minimum, one day per month). “It is good news that we come to the end of the year with new jobs formal, but the informality shows that it is not certain that this is a turning point for the economy,” says Adriana Beringuy, IBGE.
Another reality contrasts with the euphoria of the Government and the entrepreneurs: the brazilians of lower purchasing power, the hardest-hit by the recession and the less hope they have of a better future. “The people walk, each time with less money and ask for discounts all the time,” says Maria Elenice Alves, 62, saleswoman casual clothing on the streets of São Paulo, informs Heloísa Mendonça. Alves estimates that his income has been reduced by half in the last five years and despite having heard throughout 2019 that the economy is on the path of recovery, has had to deal with the unemployment of her husband, who has always worked in the construction sector. “We’re tight: unable to regroup money for retirement,” he says.
The less favoured sectors are also the most pessimistic with the general evolution of the economy. According to a survey by Datafolha, while 57% of the richest are confident that the economy will improve this year, only 39% of those earning the equivalent of two minimum wages has faith in the economic future of the country. The Government of Bolsonaro deepened the severe fiscal adjustment initiated by the Government of Michel Fear (2016-2018) and the economic team, with Guedes to the head, has opted to cut social programs for those who have less. And in his eternal pursuit to the left, it has also reduced investments in education, or culture, always with an aggressive rhetoric.
Corruption
In the last few months has also seen growing complaints of corruption against his son —and senator— Flavio Bolsonaro because of a suspicion of money laundering when he was a state representative. And the sign can reach to the president himself, to be involved people close to both. That is one of the main reasons for its popularity remains at low levels between the common brazilian: 38% disapproved of their government action, and only 29% rated it as good.
The Executive considers that the first 12 months in power were the only ones in which you might apply the remedy to the bitter fiscal adjustment. But, within his liberal philosophy, expects that employers apply to your policy pronegocios with new projects that will generate jobs and to settle the economic improvement that is already beginning to perceive in the constant macroeconomic. Public investments have been reduced to the minimum to force companies and banks to dare more to go to the market. Private investment is today at around 16% of GDP, still below what is necessary for Brazil to exceed growth in the south american country likened to the flight of a chicken: the expansion the annual average in the last two decades exceeded by very little 2%. A period in which, however, the population also increased (containing the advance of income per capita) and the GDP growth lived strong swings between extremes: from the rise of 7.5% in 2010, when Brazil became one of the priority objectives of many international investors, was passed to the strong recession in 2015 and 2016, when the GDP shrank by 3.5% year-on-year.
The current economic growth is supported, above all, in the consumption of the families, which represents two-thirds of the GDP. And one of the great challenges facing the Government is to change this axis, which hides the trap of debt: the brazilian export more than 40% of their income to the payment of debts. Hence, the challenge of the south american giant is to make rest a higher fraction of the growth in private investment, and that this will generate more employment and income, spurring a virtuous cycle. Armando Castellar, an economist with the Getulio Vargas Foundation, is sure that 2020 will bring more business investment. For several reasons: “low interest rates and inflation, at 3.9%, provide the credit. It will be a much better year”. Its GDP growth forecast for this year to 3%— it is superior even to the Government itself.
Ronaldo Evelande, owner of the food company Maricota, which employs 500 people, is one of the that is in tune with the policy bolsonarista. “The lower interest rates enabled us to sell more this year: we managed to grow by 19%, the best result of the decade-and a signal that the consumption continues to increase,” says the producer of cheese breads. He has found in the cheap credit as an impetus to dream big: your brand comes in today to 17 countries and plans to be 50 in 2025. To reach your goal, will open a new factory in Rio de Janeiro this year, with a hundred of jobs. Evelande voted to Bolsonaro in the second round without much conviction: just because I didn’t want to win the other option, Fernando Haddad of the Workers Party (PT). But now he is happy with his economic policy. Acknowledge, in any case, the president talks too much. “When [a ruling] speaks well out there, helps us. And when not, you may damage”.
it Is almost a consensus among entrepreneurs that the president causes unnecessary noises with their rhetoric. But Evelande have confidence in Guedes, the defender of Bolsonaro when the president was still a draft candidate for president whom no one took seriously. Today, the brazilian president recognizes the power of Guedes in its management. “I’m the one that I have to be in line with him, not he with me. He is my boss in this matter, I am not your boss,” he said last month. If the plans Guedes turn out well, Bolsonaro can now dream of even with a re-election in 2022. If not, your radical liberalism will be a mere page in the history of Brazil that the country will try to forget in search of better times.
Few joys in education
Shimei Ribeiro de Souza gave an important step in your life in 2019: met 36 years ago and, after sharing a flat with friends from 17, decided to buy one. His idea was to rent it only, but the interest rates low led him to go a step beyond, even if it means being in debt for more than a decade. “I make this purchase in a very economically favorable for the country”, celebrates Souza, who teaches Science in a private school of São Paulo. The supply of credit more cheap, add up the reductions in the prices of the houses, dragging a crisis of five years.
The professor has a debt of more than € 100,000, and trusting, of course, their employment is ensured in the school in which she has been since nine-year employee. Has savings plans to be able to reduce their debt by half in 2025, and, above all, feel that the relative economic stability that allows you to undertake the purchase. “[The economy] is the only thing safe from this Government. It is difficult to think in a positive impact on other issues, such as education, science or the environment,” he says. Souza has seen how many of his colleagues lost the scholarships of the Government as a result of the severe policy of fiscal adjustment of Bolsonaro. As a volunteer teacher in public schools, also has been witness of the absence of a minimal structure by the lack of investment. And the spending cuts it should be made in 2020. “Even the water in the public school. How can you live like this?”, is question. “A country that does not invest in education is doomed to failure”.
