Opinion – Vinicius Torres Freire: Brazil is at risk of political and economic hangover in 2023

The world economy will grow less in 2023, as consumption figures begin to show. There are different guesses about the size of the downturn, whether “soft landing” or recession, disparate theses held by equally smart people.

The effect of world casualties in Brazil is not usually very predictable. The risk is high, not least because we’ve been rotten from living in the cold mud for almost a decade. It’s not impossible for it to work, but it won’t rain manna and there won’t be any “takeoff”. There will be frustration, not just because of the headwind from the rest of the world.

Since 1960, there have been times when the Brazilian economy has grown more than the world average. Much more, as in 1968-1976, in the “miracle” of the military dictatorship; somewhat more, as in Lullian years (2007-2010). There were years of illusory peak, of advancement far beyond the world, all caused by a mixture of exaggerations, steroids, scams and stupidity, to stay in the superficial causes, “événementielles”.

All were the result of the accumulation of disdained imbalances and the dirty politicization of economic policy. All were a harbinger of catastrophe and horrendous recessions, such as the peaks of 1980 (dictatorship steroids), 1986 (Cruzado Plan embezzlement) and 2013 (peak of Dilmian steroids).

After these overdoses, Brazil was below the world rate for years – eight years in a row since 2014, unprecedented. The summary of the opera is that the world situation is not a direct determinant of our rhythm. After scandalous errors in forecasting and analyzing inflation, the world’s main central banks began the most aggressive and synchronized campaign to raise interest rates in two decades, a tightening that should last until the end of 2023. well, situation worsened by a Vladimir Putin even further out of the house.

By the informed guesses, the US would have a “soft landing” (minor growth), the European Union would have recession, and China would even come to recover in relation to this 2022, when growth is expected to be the lowest since 1990 (discounting the 2020 of the epidemic), around 3%. On an arithmetic average, China’s GDP per capita has grown by 8.5% a year since 1991.

It could be all wrong again. The 21st century is even more fraught with economic fraud and small talk, see the political and financial crime that exploded in the 2008 crisis, the culmination of a period that standard economists called the “Great Moderation”, one of the reasons for this era of regression. acute political and social

Returning to the cold and swamped cow of the Brazilian economy, we will have to deal with this ruin in a worsening world environment. Despite the slightly better pace of 2022, there is no evidence that we are in a position to grow beyond the “new normal” of 1.5% per year, although it can be speculated that reforms have slightly increased our “potential”, which would still be less than mediocre.

A credible project that begins to be implemented early in 2023 may even yield more immediate results. But there’s no escaping the standard treatment: a method to contain the rise in public debt, a broad reorganization of government spending, a deep change in taxes, rules that facilitate private investment, etc.: everyone is tired of hearing. Bigger “alternatives”, only after fixing the basics.

So, even in the best of cases, there can be hangovers from exaggerated hopes. Again, a lot of change needs to be made, in a more difficult world environment. It may work, but not by the means imagined by most people: the return of Lull’s “everything for the social” or, even more unlikely, the “take off” of Bolsonarian delusions.