The high interest rate scenario, the Selic rate, put the economic growth for 2022 at risk, in the view of the chief economist of MB Associados, Sergio Vale. For him, the cycle of increases has been large due to the lack of fiscal policies that help to contain the inflation.
“We are going through a moment now when there was a significant worsening of inflation, we are talking about double-digit inflation, something that we have not seen for a long time,” said Vale in an interview with CNN Brasil this Monday (15).
According to the economist, the scenario is worse because, unlike other times, fiscal policy is not helping the central bank to control inflation.
“The Minister of Economy himself abandoned the positive work he could do with fiscal policy and threw it to the Central Bank, which is more alone than ever, and because of that, it has to raise interest rates with greater intensity than perhaps it was necessary, and by doing this, we will see the Selic reach next year very close to 12%”.
If this scenario is confirmed, the increase in just over a year will be 10 percentage points.
“The impact of this on the economy is not trivial, it is the great element to explain this slowdown in 2022. It is also the source of all this stress, precisely this fiscal deterioration, which is not only in the numbers, but in the breach of confidence that arises. because of what happened with the breaking of the ceiling rule, which is not just a matter of changing the index or the precatories, it is a breach of reputation, credibility”, says Vale.
Referring to PEC of Precatório, which should change some elements of the spending ceiling, the economist says the project posed “short and long-term difficulties.” With that, “growth is at risk in 2022, but we may have growing risks from 2023 onwards as well”.
“How is the market going to believe that Brazil will be able to follow through with fiscal rules if every time you have an electoral demand it is broken?”, he asked.
When analyzing the minister’s speech Paulo Guedes, that Brazil had a higher-than-average economic growth, the economist claims that the country managed to perform better than expected in 2020, but that this scenario should not be repeated in 2021 and 2022.
“It is already very clear what growth will be now, we are going through a more difficult situation, the second quarter had a drop in GDP, the third quarter is moving towards that, we are already seeing a slowdown in the Brazilian economy, and the signal for the next year of stagnant growth is very clear”, said the economist.
With that, Vale claims that there is a mismatch between what the government announces and what is happening.
“We would like the minister to be right, to have strong growth in 2022, the investments that are being put in place to mature quickly and have an impact next year, but it doesn’t work that way. We are going to pay the prices of our excesses in the economy next year, the Brazilian market knows that, the international market too, it is preaching to converts”.
Reference: CNN Brasil