“We are going through a very positive moment in the Brazilian economy in terms of creativity, with several new regulatory frameworks in significant sectors and a thriving private equity and venture capital sector that has attracted domestic and international investment. Our market is important in Latin America and that shouldn’t change”, said Sueli Bonaparte, founding president of Brasil-Florida Business Council, Inc, at an event held by the organization on June 9th (Thursday).
The webinar “Brazilian Economic Scenario: Perspectives and Opportunities” brought together renowned names in the financial market: Pedro Calhman de Miranda, secretary of economic policy at the Special Secretariat for the Treasury and Budget of the Ministry of Economy; Oscar Decotelli, Managing Director and CEO of DXA Invest; and Alberto Ramos, managing director of Goldman Sachs.
Mediated by Paulo Vieira da Cunha, partner at Verbank Consulting LLP, former vice-governor of Centro Banco do Brasil, the event presented the speakers’ views on the economic scenario in 2022-2023, as well as the challenges that the new president-elect will face. face in its administration, and the implications and opportunities for domestic and international investors.
According to Paulo Vieira, we cannot ignore the critical moment that the country is going through. From an economic perspective, it is very clear that the war in Ukraine and these uncertainties for the future will bring an unusual concern, and from an investment point of view, the October election result could make a big change in the scenario in relation to the what happens in the tax and taxation rules.
The country has seen a significant drop in per capita income in recent years and currently has low investment rates, representing only 5% of our GDP. This small fee is related to the uncertainties of the fiscal association, and the measures taken by the rulers for the budget and revenues to contain inflation.
“If we have 0.5% growth in GDP, there is still an opportunity to find efficiency and new opportunities for American companies. Therefore, I believe there is a huge possibility to promote more relations between Brazil and the United States, partners that are so important for several years”, completed Sueli Bonaparte.
The Central Bank has taken measures that are beginning to be felt, but there is no certainty that inflation will be contained, and this affects voters as the elections approach. The US capital markets are heated and the world is also looking forward to this new phase of infrastructure in Brazil, but the current situation is one of uncertainty, despite the great opportunity that Brazil has to face this challenge in the short term.
For Pedro Calhman, Brazil recovered in the economy after this period of Covid-19, although it had problems that affected unemployment and the economic market. “We project growth of 5% in 2022, and 2.5% in 2023”.
In the first quarter, the Brazilian economy grew 1% – accumulated result of 4%. There were significant recoveries in the service sector: investments; machinery and equipment sector; agricultural and labor sector, the largest since 2016.
This improvement is in line with a better distribution of government spending and efforts to reduce taxes, transport costs, and the temporary reduction of products that have been affected by the global supply economy.
Long-term sustainable growth also depends on the structural changes presented by the government and public-private partnerships that allow for greater cash and the creation of investments in infrastructure.
This is added to the various reforms of legislation and credit capital in the productive sectors to benefit entrepreneurs from small and medium-sized companies.
“Despite the progress achieved, Congress is analyzing a series of measures that could leave a negative legacy for the next administration. This problem in the fiscal area was a serious problem in Brazil and that in a certain way scares or alienates potential investors, especially in the our stock market” concludes Calhman.
Tony Volpon, Oscar Decotelli and Alberto Ramos discussed and agreed on the challenging picture of the macroeconomy in Brazil, and the picture aggravated by global and endemic problems, and the low growth of local GDP compared to other countries.
High inflation ends up generating an accumulation of demand and supply, and available offers, which can trigger the cost of living until 2023. The potential for low long-term growth and the restrictive policy of the Central Bank further affects the performance of the economy and the low in investments and structure.
According to the speakers, it will be important for the new president to know how to deal with the allocation of resources and the destination of revenues together with the necessary fiscal adjustments and the mentality of competitiveness against inflation.