“We can have a GDP around zero in the 2nd semester, or even negative”, evaluates da Tatiana Pinheiro, chief economist for Brazil at Galapagos Capital. The specialist calculates the current financial conditions at a level very close to 2015, when the Brazil faced “the biggest recession in its dated economic history”.
The scenario of a slowdown in the economy in the coming months would go against a growth of 1% in the GDP during the first quarter of the year, with indications of a similar increase in the months between April and June.
But this change in the direction of the economy must result from a fundamental difference: the lack of injection of money into people’s pockets, defends Tatiana.
The specialist cites some events that took place in early 2022, but that will not be repeated in the coming months: the anticipation of the 13th salary for retirees and pensioners; the extraordinary loot of FGTS; and a readjustment of the minimum wage above inflation.
“All these cash impulses quickly turn into consumption, such as food, housing and transportation,” he explains. Thus, the money that was advanced at the beginning of the year will not be in people’s budgets in the 2nd semester.
economic scenario
The rise in interest rates and inflation are other factors that should impact consumption in the coming months. THE inflation accumulated high of 12% in the last year until June. Once people have less money to consume, “demand should also decrease in the second half of the year”, explains Tatiana.
Meanwhile, the Central Bank defined the Selic rate to 13.25% on June 15th, an increase that should be felt in the coming months.
As the chief economist assesses, interest rates should “commit to paying the debts of the population as a whole, which must [deixar a economia] increasingly tight, in the face of these effects”.
the share of defaultersthose who have bills or debts in arrears, reached 28.7% of Brazilian families in Maythe eighth consecutive increase in the indicator, according to the Consumer Indebtedness and Default Survey (CNC).
A survey of FGV evaluated that the indebtedness of the lower classes has already been interfering with the power of consumption. This is because 42.3% of families with income below R$ 2,100 and entitled to withdraw up to R$ 1 thousand from the FGTS and advance the 13th salary used the income received in the first semester to pay off their debts.
global recession
In addition to national factors, Guilherme Cadanhotto, a specialist in fixed income at Spiti, points out that the most developed countries in the world are also undergoing a downward revision of their economic growth projections.
Cadanhotto explains that “these countries are also going through a cycle of monetary tightening, or interest rate hikes, as a result of the pandemic”.
The expert also points out that the weakening of the Chinese economy is another factor that impacts the GDP Brazilian economy, as the country went through several moments this semester with a strict policy to control Covid-19, and faced long moments with its retail and industry closed.
“THE Chinayou USA and the block of European Union are, respectively, the first, second and third place in commercial partnership with Brazil, so the global activity will also be playing against the growth of the Brazilian economy, in a deceleration rhythm”, he summarizes.
The fixed income analyst agrees with Tatiana, and assesses that we will face an economic slowdown in the coming months.
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I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
