Is Brazil’s economy really ‘thriving’ as Bolsonaro said on September 7?

In his speech during the September 7 parade in Brasilia, President Jair Bolsonaro (PL) called the Brazilian economy “thriving”.

“When it seemed that everything would be lost for the world, behold, Brazil reappears with a thriving economy, with one of the cheapest gasoline in the world, with one of the most comprehensive social programs in the world, which is Auxílio Brasil”, said the candidate. to reelection.

“With a record of job creation, with inflation plummeting and with a wonderful people, understanding where their country can go”, he continued.

But, after all, is Brazil’s economy really as good as the president said?

Economic growth

In terms of economic performance, Brazilian GDP (Gross Domestic Product) grew by 1.2% in the second quarter of 2022 compared to the previous quarter, above economists’ expectations, which were for a rise of 0.9%.

In the annual comparison, the increase in GDP was 3.2%, according to the IBGE (Brazilian Institute of Geography and Statistics) at the beginning of the month.

With this result in the second quarter, Brazil occupies the 7th place in a ranking of 26 countries, according to a survey prepared by the risk rating agency Austin Rating.

In the list, the country is ahead of nations such as the United States (24th), Canada (23rd), the United Kingdom (20th) and Germany (19th), but behind the Netherlands (1st), Turkey (2nd). ), Saudi Arabia (3rd), Israel (4th), Colombia (5th) and Sweden (6th).

In terms of future forecasts, the IMF (International Monetary Fund) predicts growth of 1.7% for Brazilian GDP in the whole year of 2022, according to July data.

This cut puts Brazil in 16th position among the G20 countries, in terms of growth projection.

Gasoline

In his speech, Bolsonaro said that Brazil has “one of the cheapest gasoline in the world”.

According to the ranking of 168 countries prepared weekly by the consultancy Global Petrol Prices, Brazil currently has the 36th cheapest gasoline.

The company considers the average value of a liter of gasoline in dollars and compared the most recent data for all countries up to September 5th.

According to the consultancy, the average liter in Brazil is US$ 1.019. For comparison, the country where the fuel is currently lowest is Venezuela, at US$0.022, and the highest is Hong Kong, at US$2.967.

Global Petrol Prices explains that the differences between the values ​​of a liter of gasoline in the different nations in its ranking are due to various types of taxes and subsidies for the fuel.

Pedro Rodrigues, managing partner of the CBIE (Brazilian Infrastructure Center), explains that the variables that most strongly influence the price of gasoline in Brazil today are the price of a barrel of oil on the international market and the exchange rate, since the commodity is quoted in dollars.

But in addition to prices on the international market, there are other factors that can influence fuel prices, albeit in a more subtle way.

According to Rodrigues, it is worth mentioning the taxes —such as PIS/Cofins and ICMS— and the percentage of blending of ethanol in gasoline.

It is precisely the tax policy of the Brazilian government, added to the appreciation of the real against the dollar, which is causing the price to fall more in Brazil than in other countries.

“In addition to having the drop in the global price of oil, Brazil applied a policy that further reduced the tax rate, also reducing the final price of fuel. That’s why, in percentage terms, the price here dropped more than in other countries.” countries”, explains the managing partner of the CBIE.

Unemployment

The president also cited a “record of job creation”.

In July, the country registered a stock of 42.2 million formal jobs. The data released by the Ministry of Labor show that this value is the record of the historical series of the Novo Caged (General Register of Employed and Unemployed).

According to the Ministry of Labor, the stock of formal jobs is the total number of active contracts with a formal contract accounted for from the New Caged declaration. These numbers do not include public servants and self-employed workers even with CNPJ.

In terms of new jobs, Brazil created 218,900 formal jobs in the month and 1.6 million formal jobs from January to July 2022.

According to the Continuous National Household Sample Survey (PNAD), released at the end of August by the IBGE, the unemployment rate dropped to 9.1% in the quarter ended in July, which represents a drop of 1.4 percentage points in the compared to the quarter ended in April. The index equaled the lowest in the series since December 2015.

Inflation

When it comes to the fall in inflation, in the monthly variation from June to July, Brazil recorded a deflation of 0.68% in the IPCA (National Index of Broad Consumer Prices), according to the IBGE.

The fall came, however, after successive increases in inflation levels. In the last 12 months, for example, inflation in the country is 10.07%, even with the fall recorded in July.

In this segment, Brazil has the 4th highest inflation rate among the G20 countries, a group that includes the largest economies in the world, according to data from the beginning of August from the OECD (Organization for Economic Cooperation and Development).

In the group, the country is second only to Turkey, which has accumulated inflation of 79.6% in the last 12 months, and to Argentina and Russia, with rates of 71% and 16.7%, respectively.

When considering the general inflation of the G20 in the last 12 months, of 9.25%, the Brazilian rate is also higher.

In terms of future forecasts, the Focus Bulletin released on Monday (09/05) showed the continuity of the movement of improvement in inflation expectations for this and next year.

For 2022, the estimate for a rise in the IPCA — the official inflation index — was reduced for the 10th week in a row, from 6.70% to 6.61%. A month ago, the projection was 7.11%.

In relation to 2023, the median dropped for the third consecutive week, from 5.30% to 5.27%, against 5.36% four weeks earlier.

The rates continue to indicate, however, that the Central Bank should exceed its target for three consecutive years, after the breach already observed in 2021, with the IPCA of 10.06%.

The target for 2022 is 3.50%, with a top tolerance of up to 5.00%, while for 2023, the target is 3.25%, with a band up to 4.75%.

This text was originally published here.