Brazil grows less than the world under Bolsonaro government

Even if the Brazilian economy grows 2.7% this year, as projected by the government and part of the market, the country should have a performance slightly below the world average and still below the pace seen in the last four decades.

Data and projections from the IMF (International Monetary Fund) and the World Bank also show that Brazil grew below the global average in the Dilma Rousseff and Michel Temer governments (2011-2018) and that this trend will repeat in the Jair Bolsonaro (PL) administration.

The data contradict the government’s assessment that the Brazilian economy is taking off, a diagnosis that is not shared by most of the private sector.

The growth of Brazil’s GDP (Gross Domestic Product) in the first two quarters of the year and the improvement in expectations for 2022 have been celebrated by the government, which promoted an injection of money to try to reduce the rejection rates of the current president, candidate for reelection. .

When commenting on the result for the second quarter, the Ministry of Economy argued that the country grew more than the G7 countries (a group that includes the USA, Canada, Japan, France, the United Kingdom, Germany and Italy), considering the annualized rate for the first half of the year. .

Minister Paulo Guedes (Economy) said that Brazil also grows more than China, which had a GDP contraction in the period, but should have a better performance in 2022.

From 2020 to 2022, in the three years marked by the pandemic, Brazil will not outperform the world’s economic performance. This is what both data already released and projections for this year show.

Brazil should have an average growth of 1.1% per year in this period, according to a survey by economist Bráulio Borges, an associate researcher at FGV Ibre, using data from the World Bank. The global average growth is expected to be 1.8% per year. For 2023, the projection is for growth of 0.5% in Brazil, according to the Focus survey, and 2.3% for the world made by the multilateral institution.

Analyzing the period, he says that Brazil adopted a fiscal package in response to the pandemic in 2020 that is much superior to that of other emerging countries, which ensured a better performance than some economies – although below the global average. In 2021, the national water crisis played against growth. In 2022, the electoral spending package pushed GDP up, but temporarily.

“A good part of the growth this year was inflated by the domestic electoral political cycle. Unfortunately, some of these factors are fortuitous and will collect the bill soon. In 2023, we are back to growing less than the world”, says Borges.

“We can change that. It will have to restore fiscal sustainability with a new framework. It can approve a tax reform next year. But today it is a scenario that shows an important deterioration for Brazil.”

According to a survey by economist Sérgio Gobetti based on IMF data and estimates, in the four years of the current presidential term (2019-2022), the average annual growth of the Brazilian economy should be 1.16%, below the world average, projected in 1.95%. Considering a sample of 50 economies in the period 2019-2021, Brazil ranks 32nd in terms of economic growth.

In a period of 20 years, the country only grew above the global average in the period 2007-2010 (according to Lula’s administration), when it ranked 12th among the same economies. The worst Brazilian performance was in the period 2015-2018 (Dilma/Temer period), when the country faced one of its biggest recessions and was ranked lantern.

Gobetti says that the economy has grown in recent years below its capacity, a sign that the problem is not just linked to the issue of productivity, which reduces the country’s growth potential. “For higher sustained growth, productivity is a constraint. But for the low growth of recent years, it is not. Then you have to blame economic policy.”

report of Sheet December showed that the prospects for the next presidential term are also not positive and that Brazil should complete 16 years of growth below the world average in 2026.

José Luis Oreiro, professor at the Department of Economics at UNB (University of Brasília), says that the projection for 2022 is close to the average of 2.8% growth in Brazil from 1980 to 2014, a result that was no longer enough to take the middle-income country.

He also states that, in crises like the one of 2008-2009, the country grew above average in the following year and returned to the long-term growth trajectory. In the post-recession period of 2014-2016, this return to trend did not occur. In the first two years of the pandemic (2020-2021), it was close to zero to zero.

For Oreiro, this is explained by the combination of contractionary monetary, fiscal and credit policies, on the demand side, and acceleration of deindustrialization, on the supply side.

“What is happening with Brazil in economic terms is that the country is getting used to mediocrity. He sees growth of 2% and says that the economy is booming. It is not. It is a very bad growth”, says Oreiro