Who are and what do economists who clash with the market project

Despite the prevailing pessimism regarding the performance of the Brazilian economy in 2023, some analysts have presented optimistic forecasts for the first year of the next government.

THE Sheet heard some of the economists whose projections are far from the so-called “market consensus”, represented by the median (the estimate that is in the middle of the sample) of the Central Bank’s Focus survey.

They have in common the expectation that the winner of the elections will keep public spending in check and not ask for a license to spend without limits. They also expect interest rates and inflation to fall and rule out the possibility of a global recession.

In these scenarios, GDP (Gross Domestic Product) can grow by up to 2.5%, with the BC meeting (or almost) the inflation target and cutting interest rates to up to 9% at the end of next year.

“I think a GDP scenario close to zero is very difficult. If Lula is fiscally responsible, I am very convinced that the scenario will be more constructive. If it is irresponsible, I am sure that GDP will fall”, says Alexandre de Ázara, chief economist at UBS BB, an investment bank that is a partnership between the two financial institutions.

With a growth projection of 1.7% for next year, he says that the same reasoning applies to the case of reelection of the current president: the most positive scenario depends on the country having a credible fiscal rule, whether or not it is the ceiling of spending.

“The freedom they would like to have [para gastar sem limites] will not be given. Not with a good result”, says Ázara, who projects a drop in inflation to 4%, making room for interest rates to fall from the current 13.75% to 9.25% per year at the end of 2023.

Rafaela Vitória, from Banco Inter, also expects single-digit interest rates (9.5% per year), with the BC delivering inflation below the target limit (4.7%). The growth projection of 0.7% is double the median of the Focus, and it should revise the number upwards, based on the good results seen in investments and in the job market recently.

A more positive scenario, says the economist, depends on the fiscal issue, more than on the pace of deceleration of the global economy.

“The point of attention is what the government is going to do. It can get in the way, with more fiscal risk, dollar and interest rates worsening the scenario. Or we can have more predictability in the fiscal, which even allows investment to grow more. “

Fernando Rocha, chief economist at independent asset manager JGP, says that calculations carried out by traditional projection models point to a weak economy in 2023, with GDP close to zero, given the still high interest rate next year.

An analysis that goes beyond mathematical models, however, leads to better results, even with its 10.25% interest rate forecast at the end of 2023.

He projects growth of 1.5%, considering continuity of service recovery, a normalization of production chains that help the industry, and a year without climate problems for agriculture.

Rocha does not rule out a growth of up to 2.5% with an external scenario without recession and the effects of post-pandemic normalization that last longer.

“I am out of consensus. People think that high interest rates will have a greater effect. Another possibility is that the financial market will react badly to the policies of the next government, whoever it may be, and financial conditions will worsen: interest rates rise, the stock market falls, generates a negative wealth effect, lack of trust in companies and people and can pull the activity further down”, he says.

Natalie Victal, chief economist at SulAmérica Investimentos, is among economists who expect a strong impact from next year’s monetary tightening. At the other end of the Focus projections, she estimates a GDP retraction of 0.7%, despite being in line with the “market consensus” in relation to interest rates (11%) and inflation (5.2%).

The economist says the main factors pushing 2022 growth to something close to 3% — Victal has always been among the most optimistic about the current year — will not help next year. Only a labor market that continues to surprise upwards can lead to a smaller drop in GDP.

“The great motivator for greater caution with 2023 is the much more restrictive monetary policy, but there is this vector that can help a little next year, which is the job market.”

Regarding the tax, she puts in the account the continuity of the R$ 600 in Auxílio Brasil and the exemptions from PIS/Cofins and ICMS on fuel, but with some rule that limits other expenses. “If we start to discuss the absence of a fiscal model, then it’s another game.”