Synthesis of the Brazilian Economy
The political scenario continues to be guided by two basic forces: the abundant signs that President Bolsonaro is unprepared for office, and the reaction of the other branches of government and Brazilian society, trying to reduce the damages and make progress toward the reforms that are necessary for the economy to grow faster. This was apparent in the conduction of the approval of the pension reform, and what will hopefully happen with tax reform and other important themes. But the negative effects of the tension and erosion climate provoked by the president’s behavior cannot be minimized, together with the irresponsibility of the Left, which sees no limits to the effort to free Lula from jail. Economic growth remains sluggish, as the industry sector is still decelerating, and although there are some signs of improvement on the level of employment, this is led mainly by growth of self-employed workers, whose earnings are lower than in the formal labor market, and have less access to credit. The economic weakness, deceleration of inflation and anchoring of expectations has allowed the Central Bank to start a new monetary easing cycle, and the SELIC rate should end the year at 5%.
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