Will you need credit? See what economists expect from 2023 | Economy

Change the machinery. Move to a bigger property. Hire more employees. Open a new unit. The arrival of a new year shakes the minds enterprising with regard to innovating in business. But, while the economy is still rehearsing its recovery, not all companies have capital available for large or even small undertakings. In many cases it is necessary to resort to credit, and soon the doubts arrive: is it worth acquiring a debt now? For experts, the answer is: it depends.

Inflationinterest, exchange rates… there are many variables that still fluctuate in search of a balance, showing that the Brazilian economy is still going through a period of uncertainty now and in the short term.

“A highly doubtful environment has a negative impact on the supply of credit. And without credit, whether for consumption or working capital, it is very difficult to resume the desired level of activity”, analyzes Ricardo Humberto Rocha, professor at Insper and consultant for Anbima and Febraban.

With the high interest rate – this Wednesday (7/12), the central bank kept the Selic at 13.75% until February –, the economist explains that a “perverse combination” is formed: the cost of money rises and funding terms decrease. In the case of large corporations, Rocha states that it is important to observe how much interest is paid in relation to the cash flow generated.

“The problem is not paying interest, but how much it ‘eats’ cash flow. When the maturity of the bonds decreases, this relationship is compromised and the resumption of investment by Brazilian companies is somewhat delayed”, says Rocha. “This implies a lower speed of investment. And when we go down the pyramid for medium-sized companies, the cost of working capital also makes it difficult”, he emphasizes.

Asked about how small and medium-sized companies should analyze the possibilities for 2023, the Insper professor argues that they need to find or develop protection mechanisms in periods of cash shortages. One path, according to him, is to observe business models in the United States that seek credit, for example, through investment funds directed to SMEsinstead of just resorting to traditional bank credit or public policy.

“When a crisis comes, the government’s propensity to lend decreases and traditional banks withdraw from the offer of credit”, justifies Rocha. “They (SMEs) could organize themselves through their employers’ unions and create a concept, within what the Central Bank and CVM encourage in terms of innovation, of receivables certificate funds destined for SMEs”, he exemplifies.

Going a little further, Otto Nogami, professor at Insper and Fundace/FEA-USP and partner at Nogami Strategies, also defends some innovations by institutions such as the Brazilian stock exchange, which could, for example, create a department of venture capital with a focus on small and micro-enterprises.

“THE B3 it has to be seen not only as an entity that brings together publicly traded companies. You can have individual companies, small and micro companies being promoted by private capital. This would be an interesting path, because it is less costly for these companies, especially startups”, argues Nogami.

With high interest rates and inflation still impacting the purchasing power of families and the productive capacity of industries, there are still many uncertainties in the air regarding the Brazilian economy. The two agree on the importance of careful public policies and a discussion on the fiscal regime – old challenges that now fall on the table of the future government🇧🇷

“With the change in management, new expectations are created in relation to the solutions that the new economic team will be able to bring to problems that are not new and need to be solved quickly”, says Nogami. “Mainly to alleviate this dependence on the external sector and provide greater productivity for our economy. After all, we need to generate jobsgrow and improve the income of Brazilians”, he concludes.

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