2024-02-14 20:05:04
Financial market analysts believe that one of the vectors that might boost the Gross Domestic Product (GDP) this year is the payment of repressed court orders, as billions of reais start to irrigate the economy. Precatório are debts owed by the government to companies and individuals whose payment has already been determined by the Court of last resort. The Bolsonaro government had postponed this payment until 2026, but the Lula government decided to honor the debts and issued a Measure Provisional opening an extraordinary credit of around R$93 billion.
MB Associados projects growth of 1.7% for this year and Itaú of 1.8%. Banks and consultancies believe that these precatório resources might add between 0.2 pp and 0.3 pp to GDP. In a recently released report, the International Monetary Fund (IMF) increased the growth outlook for the Brazil from 1.5% to 1.7%. The Ministry of Finance, always more optimistic, projects an increase of 2.2% in the GDP this year.
Estimates are that individuals will receive more than R$40 billion, of which R$27.1 billion is allocated to retirees and pensioners from the National Social Security Institute (INSS). “This money becomes extra income for families, which can boost the economy by purchasing goods and services,” he says. José Maurício Caldeirapartner and member of the board of Asperbrasa group that operates in various sectors of industry and agribusiness.
Other positive vectors highlighted by experts are the job market, which has shown itself to be resilient and always performing better than expected; the real increase in the minimum wage, already in force; and the Desenrola Brasil Program, which was extended until March. Around 11.5 million people have already joined the program that renegotiationto date, R$34 billion in debt.
Falling interest rate
Furthermore, although it is still high, the interest rate is expected to continue its downward trend this year. “Inflation has behaved, coming in below expectations and forecasts for 2024 have fallen week by week”, recalls José Maurício Caldeira. “Falling prices enable a consistent drop in the Selic rate”, assesses the partner and member of the board of Asperbras. “The market consensus estimates a rate of 9% at the end of 2024, but if prices continue to surprise downwards, the Central Bank will be pressured to intensify the interest rate cut”, he adds. He believes that reducing interest rates is essential for economic growth, as it makes credit cheaper both for families, who are thus able to consume and acquire more expensive goods, and for companies. “Affordable credit is an essential condition for companies to make investments and this is what guarantees sustained growth.”
Agro shyer
Important positive vector for the growth of GDP of 2023, which should be close to 3%, agriculture will not give such a strong boost to the economy in 2024. Last year, with the supersafra of 320 million grains, agriculture grew 22%. Now, due to the climate, experts estimate a drop in harvest around 13.5 million tons of grains.
Another source of doubt is the fiscal uncertainty that still hangs over the Brazilian economy. In 2023, the government registered a deficit of R$230.5 billion, or 2.1% of GDP. It is the worst data since 2020, when the Covid-19 pandemic began. “This amount includes the payment of court ordersbut even if they are excluded, the primary deficit was R$138.15 billion, or 1.27% of GDP”, recalls José Maurício Caldeira.
North American Economy
Globally, geopolitical uncertainties continue to rise due to the risks related to the war between Ukraine and Russia and the fighting between Israel and the Hamas group in the Middle East. From a macroeconomic point of view, the outlook for the world has improved compared to the last quarter of 2023. In report January’s World Economic Outlook, the IMF forecasts global growth of 3.1% for 2024, an increase of 0.2 pp compared to the October 2023 report.
The review of conditions in the United States for this year, whose IMF growth estimate jumped from 1.5% (in October) to 2.1% (in January), explains much of the more positive scenario.
Just like the performance of China, with projected growth of 4.6% (0.4 pp more than October), and India, where a strong increase of 6.5% (0.2 pp more than October) is expected ), reflecting the resilience of domestic demand. “This set of data is good news for Brazil. As it is a major exporter of commodities, the country is one of the biggest beneficiaries of robust global growth”, concludes José Maurício Caldeira.
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