FGV’s uncertainty indicator falls in August and reaches the lowest level since April

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The Brazilian Economy Uncertainty Indicator (IIE-Br) dropped 4.2 points from July to August, to 116.6 points, informed the Getulio Vargas Foundation (FGV).

With the fall, the indicator reached in August the lowest level since April, when it stood at 114.9 points.

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According to the FGV, the decline in August corresponds to 71% of the increase accumulated between May and July.

“The reduction in inflationary pressure after the drop in fuel and energy prices and the dynamism of the labor market influenced the result. Despite the drop, the indicator remains at a historically high level, standing above the average high of 115 points observed between July 2015 and February 2020.

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“A more expressive reduction in the indicator will depend mainly on the economic situation in the coming months, particularly on the perspective of sustaining the current growth phase, but also on the political scenario after the elections.”

The IIE-Br is made up of two components, which moved in the same direction in August.

The first is the IIE-Br Expectation, constructed from the dispersion of forecasts for the exchange rate and for the IPCA, which dropped 9.3 points in August, to 115.4 points.

As a result, the component contributed negatively with 1.9 points to the aggregate change in the IIE-Br in August.

The other component, the IIE-Br Mídia, maps the frequency of news with mention of uncertainty in the main newspapers.

The component dropped 2.6 points in August compared to July, to 115.1 points, contributing 2.3 points to the aggregate drop in the indicator.

Source: CNN Brasil

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