Consumer confidence and that of civil construction and industrial businessmen increased in April, according to indicators surveyed by FGV. It’s not optimism. Confidence is still at the level of dissatisfaction, of pessimism, but it has increased. It had been generally low since the middle of last year.
It does not mean that there will be an economic turnaround, with an increase in consumption and, even less, in productive investment. But the slight change of mood favors the government’s prestige.
Since the beginning of the year, the vote for Jair Bolsonaro has increased by about a couple of points. Even with the spike in inflation, which continued at least until mid-April, with food shortages at a terrible 15% a year, generally a reason for even greater revolt.
The matter, therefore, is more political than economic. The question is to know the reason for this downturn in moods and if it will last.
What would be new?
Growth since late 2021 has not been as low as expected. More pessimistic economists and banks revised small recession estimates for growth beyond 0.5%. In the median of forecasts compiled by the Central Bank, GDP would grow 0.65% in 2022. But the refreshment does not seem to come from there.
As already written in these columns, from February 2021 to February 2022, the number of people with some kind of work increased by almost 8 million. This Friday, we’ll find out what happened in March, but the signs are that more people got some work.
According to FGV economists, it seems that the consumer has become less pessimistic because of government measures such as the release of the partial withdrawal of the FGTS or the anticipation of the 13th of the INSS. We hear people on the street saying that they are going to withdraw the FGTS.
In industries, the reason may have been the decompression of bad news from the beginning of the year: less Covid, fewer problems with suppliers, reduced shock with the war. In construction, there is even some satisfaction with prospects for months ahead, in addition to the enthusiasm to hire workers. Perhaps the works of states and city halls, whose cashiers are full, are giving some encouragement to the sector.
It is necessary to qualify this reduction of pessimism a little more. Consumers are very dissatisfied, pessimistic as they were not even seen in many months of the epidemic in 2020 and 2021. Civil construction entrepreneurs are on the verge of switching to “optimism” in the FGV indicator. The wave of rising industrial entrepreneur pessimism, which had been coming since August 2022, has subsided. But confidence is at a level well below what it had been from late 2016 until the beginning of the epidemic.
That is, they are crumbs of discouragement reduction.
The growth of 2022 cannot be saved. Per capita income (GDP) will be almost stagnant (the population grows by about 0.7% per year, estimates the IBGE).
The said household consumption, private consumption should not increase by more than 1% either, because new jobs pay little and this small income is still massacred by inflation.
Investment in new production facilities, homes, machinery, equipment, software, etc. there won’t be a turnaround. It should fall in 2022. The boom is given. Investment plan is not turned upside down in mid-election year in a chaotic country, in a world in which growth is likely to point downwards and which is also very uncertain.
However, there is no major downturn in the economy. There are temporary income patches (FGTS, 13th, etc.). The socio-economic situation is obviously dire, but there is no accelerated disaster scenario, as the opposition had hoped.​
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.
