In December, the cost of the most relevant loans was already higher than in December 2018, just before the beginning of the government of Jair Bolsonaro. It was already more expensive to finance a house, car, “other goods” or working capital, for example. Other interest rates were on the verge of surpassing that level.
The government and its friends in Congress want to reduce taxes on fuel, electricity and also on industrial products, household appliances, according to Paulo Guedes. Forget, for a moment, how much bullshit there is in these ideas. Who will buy more? With what clothes, money or spirit?
National income, GDP, is not expected to grow in this 2022, to be optimistic. Income from work will grow even less. In fact, it is quite possible that they will decrease.
In the projections of economists at Bradesco, the sum of all income from work, the mass of income, should fall by 1% this year. From 2017 to 2019, the three glorious years of the post-recession penury, the mass of earnings grew by an average of 2.6% per year. Note: in those very chipped but less bad years of the decade of national impoverishment, total income was still growing. In 2022, it may decrease.
The average value of salaries should fall even further, 3.5%, also according to estimates by Bradesco personnel. In the 2017-2019 triennium, they still rose at least 0.4% per year. It looked bad then. It could be worse in this 2022 election.
The cost of credit in banks will not drop anytime soon. Probably not before the basic interest rate, the Selic, starts to fall, apart from miracles, to be optimistic. That is, not before 2023. Bank defaults and loan arrears are at well-behaved levels, but they are also expected to increase, which increases the cost of money and hampers some of the funding release.
Who will have the courage to buy, with the high unemployment rate, which is scary? With precarious, insecure and low-paying jobs? To put it in other terms, how is consumer confidence doing? Better to give the floor to those who measure this spirit, the Brazilian Institute of Economics (Ibre) of FGV:
“Consumer confidence shows a positive result in December, but ends 2021 down by 2.6 points. It was a difficult year for consumers, especially for those with lower purchasing power. that of high-income consumers reached the highest level in the series of the last 17 years, mainly due to the financial difficulty of consumers with lower income levels in the face of unemployment, high inflation and increased indebtedness”, read the note in which it was released the survey at the end of last year.
In addition to eating away at purchasing power, a major reason for the expected drop in the average real salary this year, inflation will scare away those who still have some to spend. The IPCA will run at around 9% a year until June, very close to the 10% at which it ended 2021.
Tax cuts are electoral demagoguery, which, in practice, can come to naught and cause collateral damage. The federal government has a deficit, spends more than it collects, even disregarding interest expenses. Giving up revenue, therefore, implies increasing public debt even more. Depending on the size of the bullshit, the damage can further salt interest rates and the price of the dollar.
Finally, if more debt is needed, there is a much more important need at the front of the line. Just look at people left in the misery of the sidewalks, begging for money on the street or picking up garbage to eat.
It’s all a scandal, a demented demagoguery, an economic nonsense. Who’s calling?
Source: Folha
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