Regardless of who is the winner in the presidential elections, the next government will have a relevant challenge in the fiscal area. The assessment is by economist Aod Cunha, economic commentator and current member of the Board of Directors. He addressed the prospects for the Rio Grande do Sul and Brazilian economies, with “a long-term view”, this Saturday morning at the IV Meeting of Economics, promoted by the Regional Council of Economics of RS (Corecon-RS). The event, which takes place this afternoon, takes place in the auditorium of the Association of Tax Auditors of the Municipal Revenue of Porto Alegre (AIAMU), on Rua dos Andradas, in the Historic Center of Porto Alegre.
“This year, Brazil will have a higher GDP growth rate than we expected at the beginning of the year, for a number of reasons, such as a faster recovery of the labor market and a lot of fiscal impulse, a lot of income transfers that the government is doing…”, he said. “On the other hand, for the next year, there is a lot of uncertainty again, mainly due to this fiscal issue… What will the next government, regardless of who wins, do with the budget, how will it accommodate these additional expenditures…? The next year will be very challenging”, he added.
For the Brazilian economy, Aod Cunha evaluated that, despite high interest rates, growth expectations for 2022 improve significantly, mainly due to more fiscal impulse and improvement in the job market. He stressed that inflation began to subside with the help of lower fuel and energy prices, but interest rates should remain high for longer.
About Rio Grande do Sul, Aod Cunha recalled that RS is not an island and in the long term much of its growth is linked to Brazilian growth, which has been quite low. Regarding the long-term challenges of the Rio Grande do Sul economy, he mentioned that the local consumer market is relatively small compared to the Southeast and Northeast regions, as a factor for attracting investments, it has unfavorable demographics and geography, as well as the fiscal situation of the public sector.
The alternative, considered Aod Cunha, involves focusing on human capital and quality of life to be a center for exports of goods and services with greater added value for the country and the world, in addition to maintaining the fiscal sustainability of the public sector.
“The world is slowing down and it will grow less… the whole world still has very high inflation, the interest rate will still rise a lot.. It’s not just the Ukraine war, there are these lockdowns again in China, which the economy is shutting down again… All this projects lower growth for the world”, he said. He emphasized that the persistence of high inflation and expectations of further interest rate hikes and reduced Chinese growth are starting to decelerate the global economy more strongly.
In this context, he noted, there is discussion that Brazil may have “more opportunities in this new world, a relocation of production chains”, but he warned that to take advantage of this it is necessary to carry out reforms, such as tax and administrative reforms, in addition to improving the quality of education.
“It’s a possibility, but we need to make our schedule, which has been due for some time,” he said. “We don’t have to wait for what the world is going to do, we need to do it… The world always has opportunities. Companies, more than governments, are discussing the reallocation of production chains… Brazil can take advantage of this, but it will only take advantage if it does its homework”, concluded Aod Cunha.
The event brings together nationally renowned economists and professionals from different areas to discuss the perspectives of the Brazilian and regional economy, scenarios for the industry, agriculture and services sectors in Rio Grande do Sul, in addition to other current topics, such as innovation and technology and job market for the economist. The meeting, which has the support of the Federal Council of Economics (Cofecon), is aimed at professors and students of Economics from universities in Rio Grande do Sul, professionals from all branches and the general public.
A member of the event’s organizing committee, the Federal Councilor for Economics, Clóvis Meurer, recalled that the Economics Meeting has knowledge as a “great objective”, being aimed especially at university students and professionals in the area. “Economists have extensive training to be able to suggest decisions for executives and governors”, he pointed out. “The world is very globalized… The education of economists who have a global vision is super important to make more assertive decisions”, she pointed out.