It’s been a month and a half since the year started, but it’s worth sharing with readers what, for me, is the agenda of themes to look at and investigate throughout 2022.
On the international scene, the most relevant issue, and the greatest source of risk for emerging economies today, is the nature of the American inflationary process. There are two possibilities. First, with the reversal of shocks, inflation will subside. In that case, given that in another ten months the labor market will be at full employment (that is, in the same position it was in February 2020), the US central bank, known as the Fed, will have to smoothly raise the nominal rate to neutral, currently calculated at 2.5% per year.
The second possibility is that inflation gains inertia and its current high is not fully reversed with the reversal of shocks. In that case, the Fed will have to raise interest rates much more for inflation to return to the target.
High interest rates there always hurt emerging countries. The second theme in the international economy to be monitored is the reversal of the various shocks. Everything suggests that ports, freight and container movements improve well over the first half of the year.
Thermal coal and gas, mainly in Eurasia, should normalize throughout the year, if nothing too serious happens in Ukraine. The supply of non-automotive chips should normalize throughout the year, and that of automotive chips in 2023. Oil normalization should occur later, 2023 or 2024.
The third topic on the international agenda is the world grain harvest. Since the Chinese slaughtered 40% of the swine herd because of the African swine flu in 2019 and reconstituted it with modern farms, global demand for soy and corn has increased by approximately 5%. Low inventories hit prices. Last year, the harvest was not good. Prices still high. Will there be more intense normalization of the price of animal feed?
Important to define how inflation will go for the entire animal protein chain: meat, dairy and eggs.
On the domestic agenda, the most important item is knowing which clothes Lula will govern in 2023 if he wins the October elections, as suggested by the polls.
Second, there is a lot of doubt regarding the activity scenario. The market sees the economy walking sideways or retreating. The median of expectations from the Focus survey, conducted weekly by the BC, indicates growth of 0.3% in 2022. However, it seems to me that there will be growth in the range of 1% to 1.5%.
It is difficult to imagine the economy standing still or retreating in an election year with states with comfortable finances — in 2021, real ICMS revenue growth was 16% compared to 2019.
The third topic on the domestic agenda is to observe the fiscal deterioration in the Union as a result of
Bolsonaro’s populist measures to try to get reelected. We are in a situation that is similar to 2014, when President Dilma Rousseff promoted a strong deterioration of public accounts to guarantee reelection.
Won but “didn’t take it”. Lost governability was prevented. As I wrote in this space recently, electoral fraud is not a moral issue. It is in the nature of democracy a political cycle in public expenditure.
If you miss the dose, you win by losing, as Dilma warned in 2014, Marina Silva. Win and not rule. These are the themes to follow in 2022.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
