Brazil is the only country in the world with revisions for growth, says BC president

The growth of the Brazilian economy has been a positive surprise, and the country is the “only one in the world” with upward revisions in the projections for the Gross Domestic Product (GDP ) of 2022, said this Friday (26) the president of central bank Roberto Campos Neto.

“Brazil is the only country in the world with growth reviews. Yes, there were government measures that helped, but I think there are structural aspects as well,” she said.

In event, Campos Neto highlighted a “strong growth of services, but industry still suffering a little”. The “big surprise”, according to him, is the performance of the labor market projecting an unemployment rate of 8.5% this year.

“It is a rate that has not been seen for a long time, nothing in the world in this proportion of Brazil, which shows the effect of combined policies. Credit is also super healthy. A rise in delinquency is natural with a rise in interest rates, but even so within the parameters, ”she evaluated.

When talking about the frame inflationary in Brazil, the BC president highlighted that he celebrates recent improvements, such as deflation in july and which attributes the movement to government measures, such as the drop in the ICMS rate.

Even so, he defended that “you cannot let your guard down”, with the food prices still high, and that most of the effects of the interest rate hike have not yet been felt by the economy.

He pointed out that Brazil “leashed ahead” of the rest of the world, with a “faster, more aggressive” interest rate hike cycle. “There is practically nothing in terms of pricing increases in interest rates over the next six months here”, he pointed out.

Campos Neto also stated that many countries have implemented measures to mitigate the impact of war in ukraine in energy and food prices, a move adopted by Brazil only more recently.

“Other countries had done this longer, some since the beginning of the pandemic. On average, Brazil spent less than the OECD average on these measures,” he said.

For Campos Neto, current inflation differs from the inflationary period of 2014, when Brazilian inflation rose while global inflation remained stable.

“Now, it’s the opposite, ours is below the average of the developed ones. It makes no sense to analyze inflation compared to 2014, they are categorically different. All countries have inflation above expectations, both this year and next. Brazil has already done much of the work,” she says.

Globally, Campos Neto highlighted a movement of improvement in inflation, but the numbers are still high in many countries, with the need for new interest rate hikes, indicating a period of “high inflation and lower growth”, indicated by the downward growth revisions. in most countries.

“We think the fed should remain aggressive and vigilant in its work”, said Campos Neto about the performance of the US central bank, highlighting a recent improvement in the country’s numbers. For him, however, there is “clearly” a global economic slowdown.

“All models show that the strongest deceleration in United States has a higher probability. I think the next three months will be crucial to understand this situation, if the deceleration was incorporated, it should reflect on prices, if they do not fall, it may indicate a harder landing”, he evaluated.

On the fiscal issue, Campos Neto stated that there are doubts regarding the continuity of the measures announced by the government, such as the increase in Auxílio Brasil, in 2023, and how they would be financed, but that “it is not up to the BC to speculate”.

“Regardless of the government, Brazil faces the problem that whoever sits in the chair will have to look at the social and fiscal aspects and find balance. Whatever is decided, we will look at the model,” she said.

The president of the Central Bank also highlighted that “it is important to have a good fiscal environment to deal with inflation. Brazil will end the year with a gross debt similar to that before the pandemic, one of the few countries in the world” that will achieve this.