Why GDP is not the indicator that most influences voters, according to economists

The Brazilian economy grew 1% in the first quarter of 2022, compared to the last three months of 2021, reported this Thursday (2) the IBGE (Brazilian Institute of Geography and Statistics).

In comparison with the same period of the previous year, GDP (Gross Domestic Product) grew by 1.7%. In current values, the GDP reached R$ 2.249 trillion.

The result was expected by analysts. According to experts consulted by BBC News Brasil, the growth reflects positive results driven by the economic reopening and a recovery of the job market, added to the appreciation of commodities in the global scenario.

The recovery is driven by the service sector, which grew 1% in the first quarter of 2022, according to the IBGE.

But, according to political scientists and economists, the disclosure of the data should not have a major impact on the Brazilian electorate’s voting decision.

This is because, according to experts, the positive result of the GDP is not always aligned with a positive and optimistic feeling about the economy among the population. Other factors, such as high inflation and unemployment rates, can weigh much more when Brazilians go to the polls.

Driven by the value of some foods and fuels, official price inflation in Brazil reached 12.13% in May, in the last 12 months, according to the IPCA (National Consumer Price Index).

“In my experience, GDP growth at a level like this takes time to reflect in a positive sensation in public opinion. Especially since growth is normally observed in a heterogeneous way among different regions and sectors of the population”, says Mauricio Moura, president from Instituto Ideia and professor at George Washington University, USA.

According to the doctor in economics and politics, most of the electorate is not attentive to the disclosure of macroeconomic indices, but to the way the economy affects their daily lives.

“People are dealing with the difficulty of paying bills, finding a job and surviving — and they often don’t understand how the growth data they see on television can dialogue with the loss of income they see in their daily lives,” says Moura.

Rodolfo Margato, economist at XP, considers that the current macroeconomic scenario produces mixed signals for the perception of the consumer and the worker.

“On the one hand, we have seen an increase in consumer and business confidence in the economy in the recent period, which is directly related to better GDP performance and an improvement in the job market”, says the expert.

“But there is the other side of the story: a very high inflation, which ends up hurting the economic sentiment of the population”, adds Margato.

The ICE (Business Confidence Index), calculated by the FGV (Fundação Getulio Vargas) and cited by the specialist, increased 2.9 points from April to May this year. This was the third consecutive rise of the indicator, which reached 97.4 points, on a scale of 0 to 200 points, the highest level since October 2021 (100.4 points).

When it comes to the job market, the main evaluation index is the unemployment rate. According to the latest IBGE release, on May 31, the rate dropped to 10.5% in the quarter ended in April, the lowest level since 2016. But the lack of work still affects 11.3 million Brazilians.

What is behind the growth of the economy?

According to data released by the IBGE, there was a fall in Agriculture (-0.9%), but stability in Industry (0.1%) and an increase in Services (1%) in the first quarter of 2022.

In the external sector, Exports of Goods and Services grew by 5%, while Imports of Goods and Services fell by 4.6% compared to the fourth quarter of 2021.

According to Margato, the biggest factors driving the rise in GDP are the economic reopening after the pandemic, the appreciation of commodities on the global stage and the recovery of the job market.

“The first factor behind this growth, and perhaps the most important, is the economic reopening with the added benefit of the most recent easing of restrictive measures against Covid-19, such as the non-mandatory use of masks in closed places, especially in retail and leisure areas”, says the economist.

At the same time, the very high levels of commodity prices on the global market have benefited Brazil, which is a major net exporter of commodities such as soybeans and iron ore.

“There is a direct impact on sectors that export commodities, such as agribusiness and mineral extraction. The higher profitability ends up spilling over into other activities, such as commerce and services.”

Finally, Margato explains that with the reopening of the economy, many activities and services that are intensive in labor began to hire more in recent months.

“It is true that in terms of average wages the levels are still relatively low, still far below what we saw before the pandemic, but there are unmistakable signs of a solid recovery in employment”, he says.

XP’s forecast is that the economic growth trend will also continue in the second half of the year. However, starting in the third quarter, the consultancy expects a drop as a consequence of the slowdown in domestic demand and the rise in interest rates.

Inflation and wage gap

For the professor of Political Science at UFSCar (Federal University of São Carlos) Maria do Socorro Braga, despite the good news regarding economic growth, the impact of inflation on purchasing power and the wage gap are two factors perceived more intensely. by the voter today than GDP figures.

“From the point of view of electoral behavior, the vote can be greatly influenced by the economy, even more so in a year like this, after a pandemic”, he says.

“But the disclosure of the indicator by the IBGE affects only the most attentive layers and who have extensive knowledge of what GDP means for the economy. In a context of double-digit inflation, what most people really realize is its power of purchase being corroded.”

In this context, according to Braga, the candidacy of President Jair Bolsonaro (PL) for reelection is the most affected, since the population tends to attribute the current economic scenario to the incumbent leader.

“It is not this GDP growth in the first quarter that will generate major changes in electoral polls. Unless, of course, new economic policies are launched along with it that will reduce unemployment and inflation and increase the power of buys in a very short time”, he says.

The latest FSB/BTG electoral poll, released on May 30, points to former president Luiz Inácio Lula da Silva (PT) with 46% of voting intentions in the first round, ahead of Bolsonaro, with 32%.

Ciro Gomes (PDT), Simone Tebet (MDB) and André Janones (Avante) had 9%, 2% and 1% of intentions, respectively. The others did not score.

‘Re-election is about the economy’

A Datafolha poll carried out between May 25th and 26th showed that most Brazilians believe that the economy will be decisive in deciding their vote in the October election.

Among those interviewed, 53% consider that the economic situation is having “a lot of influence” on their voting decision.

Added to those who think that the economy has “a little influence” (24%) in this choice, the importance of the topic reaches 77% – while 21% see no influence at all.

“It’s a cliché, but reelections are decided by economic performance”, says Mauricio Moura. “Brazil had several presidents elected or reelected due to the influence of the economy”.

In the current scenario, the population’s perception of the economic situation helps to explain Jair Bolsonaro’s performance in the polls. According to Datafolha, between March and May, the share of those who consider that their economic situation has worsened in recent months rose from 46% to 52%.

Among voters of the current president, the possibility of a change of vote due to a worsening economy is about ten percentage points higher than among supporters of former president Lula.

If inflation rises, for example, 32% of the president’s voters could change their vote, according to the poll. Among Lula’s, they are 23%.

“The Datafolha survey helps explain the reasons why, for the first time, an incumbent starts the election year without being able to reverse his disadvantaged position”, says Maria do Socorro Braga.

If he doesn’t win, Bolsonaro will be the first president not to be reelected among all those who could run, since redemocratization, for a second term.