Inflation should be higher in a PT government, says Stuhlberger

In an eventual third term of Luiz Inácio Lula da Silva (PT) starting in 2023, Brazil should experience greater and more persistent inflationary pressure compared to what has been observed in recent years.

The forecast was made this Tuesday (1st) by Luis Stuhlberger, CEO and investment director of Verde Asset Management, one of the main asset managers in the Brazilian market, which has approximately R$ 50 billion in assets.

“Let’s spend a little more on investment [em um novo governo do PT]and we will certainly have higher inflation”, said Stuhlberger, during a virtual event promoted by the bank Credit Suisse.

In this week’s Focus survey, the median of the projections of economists consulted by the BC (Central Bank) indicates an inflation in Brazil of 5.38% in 2022, decelerating to 3.5% in 2023.

In 2021, the price increase was 10.06%, the highest percentage since 2015.

In Stuhlberger’s assessment, the equilibrium rate of inflation in the country in the event of a PT government of a populist character should be closer to 5% per year, 1.5 percentage points above the center of the target for 2022.

“I don’t see Brazil under any circumstances anymore, with the PT government, returning to inflation levels of 3%, 3.5% as it was”, said the manager of Verde Asset, who saw the main fund of the house close 2021 with a drop of 1.1%, marking the second negative profitability in its history.

Rogério Xavier, founding partner of SPX Capital, said, in turn, that he foresees a new PT government with difficulties in dealing with the fiscal framework, possibly adopting an increase in the tax burden as a way out.

“I think Brazil will make little progress, unfortunately. I don’t see a PT administration making major changes in the country. I see a very tight budget, there’s no way to cut discretionary expenses anymore, and to do what the PT has as a flight plan, I think we’re going to have to raise taxes,” Xavier said.

In any case, despite the prognosis, the manager of SPX Capital, who lives in London, also said that the recent rise in the Brazilian Stock Exchange may be related to a more favorable view that foreigners in general have in relation to the former. -president.

“People like Lula out here, he is very well received, and they don’t like Bolsonaro, that’s a fact,” Xavier said.

“[Os estrangeiros] they see the exchange of power, assuming that Lula’s election is well underway, as a responsible Lula, who will address the center, and who, despite speaking against the spending ceiling, will arrange a fiscal framework to put in place. I personally don’t believe that will happen. I think the difficulties in fiscal terms are much greater than we imagine,” said the SPX Capital manager.

Portfolio manager at Clave Capital, André Caldas said that any move by candidates towards the center, especially by PT, should be well received by investors.

“I think the upside [valorização] of the market will come as Lula moves closer to the center and consolidates a coalition against the current government,” said Caldas.