Government will raise GDP growth forecast to 2% this year

The Ministry of Economy will revise its GDP (Gross Domestic Product) growth estimate in 2022, from 1.5% to 2%, according to government sources heard by the Ministry of Economy. Sheet.

The new projection indicates an improvement in the outlook for economic activity this year, in the wake of the positive numbers observed in industrial production, in the volume of services and in the fall in unemployment.

For 2023, the estimate should be kept at a high of 2.5%. The announcement is scheduled for next Thursday (14).

The GDP data serves as a reference for the bimonthly review of the Budget, which will be concluded by July 22nd.

More robust growth in the economy this year translates into a greater volume of revenue for the government, helping to reduce the deficit in the accounts.

However, the spending cap prevents the extra revenue from being used to fund new expenses.

The PEC (proposed amendment to the Constitution) of kindnesses is an exception in allowing President Jair Bolsonaro (PL) to pierce the ceiling and boost social benefits less than three months before the elections.

The new Budget numbers will still be discussed internally by the technicians before the final decision by the JEO (Budget Execution Board), a collegiate formed by ministers Ciro Nogueira (Casa Civil) and Paulo Guedes (Economy). But there is already a queue of demands to be accommodated.

Among them, a cost of R$ 3.8 billion is estimated by the end of the year with the overthrow of the vetoes of the Aldir Blanc and Paulo Gustavo laws, which seek to promote culture.

The government’s greater optimism regarding the performance of GDP this year has been echoed in the financial market. According to the Focus Bulletin, collected by the Central Bank, growth estimates for this year rose to 1.59% in the edition released on Monday (11), but some institutions such as Itaú also project a greater variation, of 2%.

The government started the year with a growth forecast of 2.1%, but the data was revised in March due to fears of a more intense slowdown in the economy after the post-Covid recovery.

In 2021, Brazilian GDP grew by 4.6%, offsetting the 3.9% drop in 2020, the year that concentrated the most devastating effects of the health crisis.

Despite the rise in the basic interest rate, the Selic, serving as a brake on the economy, other measures have gone against the grain, helping to sustain activity — which, on the other hand, makes it difficult for the Central Bank to control the inflation.

At the beginning of the year, the government had already released an extraordinary withdrawal of R$ 1,000 to workers with resources in the FGTS (Fundo de Garantia por Tempo de Serviço).

Guedes’ team also announced tax cuts on industrialized products, diesel and cooking gas.

At the end of June, Congress approved a new cut in federal taxes on gasoline and ethanol, in addition to setting a ceiling on the collection of ICMS, state tax, on fuel, electricity, transport and telecommunications.

The PEC of kindnesses also allows the government to boost social benefits, raising the Auxílio Brasil floor to R$600, creating a monthly allowance for truck drivers of R$1,000 and doubling the value of Auxílio Gás.

In a public hearing at the Senate this Tuesday (12), Minister Paulo Guedes highlighted the optimism with the resumption of the economy, although he did not detail the new official projections.

On different occasions, he has already warned, in a defiant tone, that economists are wrong in their most pessimistic predictions. For him, the market underestimates Brazil’s growth potential in 2022.

“Brazil is surprising. The economy is growing faster than all estimates. Estimates are being revised upwards,” Guedes told the senators.

“Instead of getting a ten in the tax and zero in the social, it is much better to share this excess collection with the most fragile, passing on a part of this excess collection, in the form of tax reduction”, he added, defending the measures. .