Government lowers GDP growth forecast and says it expects long-term results.
The Jair Bolsonaro government is also working with the expectation that the economy will perform well below what was expected by the economic team of Economy Minister Paulo Guedes, and the initial expectation, which was for a 2,5% increase, has been reduced to 2%; "Paulo Guedes and his team, however, do not seem to show much concern about the continuation of the economic lethargy," observes journalist Fabio Graner; for him, the lack of stimulus to the economy in the short term "could be costly for the ambitions of the economic team."
247 - With the market lowering its projections for economic growth this year, the Jair Bolsonaro government is also working with the expectation that the economy will perform well below what was anticipated by the economic team of Economy Minister Paulo Guedes. The initial expectation, which was for a 2,5% increase, has been reduced to 2%.
"The 0,41% drop in the IBC-Br (a preliminary GDP indicator calculated by the Central Bank) has definitively raised the alarm, putting the risk of another disappointing year on the radar. The discouragement that is beginning to show regarding the level of activity contrasts with the relative optimism still observed in some financial assets, such as stocks and interest rates," highlights journalist Fabio Graner in the Valor Econômico newspaper.
"Paulo Guedes and his team, however, do not seem to show much concern about the continuation of economic lethargy," he observes. According to him, the government's goal at the moment is "to accept whatever comes" in the short term and "to approve measures that will bring back sustainable long-term growth."
"The first of these structural actions is pension reform, which, according to the government, would remove fiscal uncertainty and inject a positive wave of expectations and investments, especially foreign ones, boosting GDP," he says.
"Despite Paulo Guedes' conviction that short-term stimulus is not appropriate and the scarcity of instruments for action, ignoring the negative impacts of continued weak economic activity could be costly for the economic team's ambitions. The Ibope poll numbers showing a rapid deterioration in the popularity of the government and President Jair Bolsonaro should be seen as a warning sign, if the plight of those who cannot find employment does not resonate as much with the current czar of the Brazilian economy," he assesses.
Read full of the analysis.