FGV: Brazil will only emerge from the post-coup depression in 2020.
The economic chaos caused by the alliance formed by PSDB and MDB, first to overthrow Dilma and then as a consequence of the policies of Michel Temer and Henrique Meirelles, will only be overcome in 2020, according to the Getúlio Vargas Foundation; a groundbreaking study by economist Silvia Matos indicates that it will take 16 quarters – four years – to return to the same level of Gross Domestic Product (GDP) as in 2014; this will be the longest period of recession ever experienced by the country since the 1980s.
247 - A groundbreaking study by economist Silvia Matos, from the Getulio Vargas Foundation (FGV), indicates that it will take 16 quarters – four years – to return to the same level of Gross Domestic Product (GDP) as in 2014. This will be the longest recovery period of all the recessions the country has experienced since the 1980s. Adding up the five quarters since the ineffective recovery at the beginning of 2017, Brazil is still 5,5% below its 2014 GDP, and according to the researcher, it will take another 11 quarters to return to the initial point of the crisis. In other words, the coup-like mess led by the Temer-Meirelles duo will only begin to be overcome in 2020.
'Even in long recessions, like that of 1989, the growth rate afterward was stronger. Taking another three years to return to 2014 levels would be unprecedented in Brazilian history. The forecast is based on average growth since the end of the recession, around 0,5% per quarter,' comments Matos, in Report by Cássia Almeida, in the newspaper O Globo.
"The economist warns that so many years of recession and low growth are making the country less capable of producing economic expansion, with the workforce more unprepared due to time out of the market, and without investment, which has also reduced our production capacity. According to the economist's calculations, the potential GDP, the ceiling of our expansion without generating inflation, is 1,5%. It was once 4%." Silvio Campos Neto, from Tendências, arrived at a similar result. He calculates that we will return to the 2014 level in the third quarter of 2020, one quarter earlier than Silvia predicts. He expects an average expansion of 0,6%. There are 26 quarters between recession and recovery:
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The recovery period could be even longer than four years if business and consumer confidence remains low, as recent surveys have shown. In May, the National Confederation of Industry (CNI) found that the confidence index had fallen by 5,9% due to the truckers' strike. In June, with the impact of the movement already reduced, it rose by 0,6%, nowhere near recovering the losses of the previous month.There was no in-depth analysis of the process. But the number seems to bring a new dimension of uncertainty related to the election results. We still don't have a sign of which candidates will go to the second round. And there is no clarity in the candidates' proposals on fiscal issues and pension reform. We have had high deficits since 2014; this sequence has to be interrupted," says Flávio Castelo Branco, executive manager of Economic Policy at CNI.