The recent economic indicators have shown positive results and caused the market to present revisions regarding the growth expectations of the Brazilian economy.
On Monday (5), the president of the Central Bank (BC), Roberto Campos Neto, commented on the positive data, assessing that the growth presented in the Gross Domestic Product (GDP) in the second quarter of this year was of good quality.
“We had a growth of 1.2%, which was a surprising number, but it surprised us in terms of quality, because we basically see [como causas] investment and household consumption, which is where we didn’t expect it would come”, said Campos Neto.
On Thursday (1st), the IBGE (Brazilian Institute of Geography and Statistics) reported that the Brazilian economy recorded growth of 1.2% in the second quarter of 2022 compared to the first three months of the year. The result was driven by investment measured by Gross Fixed Capital Formation, which increased by 4.8% in the period, and by household consumption, up 2.6%, the highest increase since the fourth quarter of 2020 (3.1 %).
On the same day, the Secretary of Economic Policy of the Ministry of Economy, Pedro Calhman, also considered the quality of the results. “This is growth driven by investment, which generates greater production capacity in the future. So it’s the best kind of growth,” he said.
Productivity
experts heard by CNN Brasil Business reinforce the quality of growth, however, they explain that for the long term and the continuity of quality growth, the country must be concerned with increasing productivity.
The economist and director of the Center for Fiscal Citizenship (CCif), Bernard Appy, explains that the pace of productivity has been low in the last 40 years. According to the specialist, for this increase to occur, it is necessary to improve institutions, correct distortions in the tax model and improve the training of the workforce in Brazil.
In a report that analyzes the annual productivity series of the Brazilian economy by FGV IBRE, the trajectory between productivity per hour worked and a measure of economic well-being, given by per capita income, between 1981 and 2021 was compared.
The result obtained by the researchers shows the close relationship between productivity and well-being in the long term, since between 1981 and 2021, while per capita income grew 0.8% per year (yy), productivity per hour worked increased by 0 .6% pa
According to the study, further evidence of the strong connection between productivity and well-being is the fact that periods of faster increases in per capita income are associated with an acceleration of productivity growth.
The researchers cite as an example that, between the decades of 1990-2000 and 2000-2010, the growth of per capita income increased from 1% pa to 2.3% pa (variation of 1.3 percentage points). Between these two decades, productivity growth per hour worked accelerated from 0.7% pa to 1.6% pa (change of 0.9 pp).
In addition to productivity, experts highlight the dysfunction of the Brazilian tax system, its impacts on the economy and, consequently, the need for reform.
Bernard Appy reinforces the importance of tax corrections through a comprehensive reform. “Today in Brazil we have, in indirect taxes – such as PIS/Cofins, ISS, etc – a huge amount of tax benefits, differentiated rates. In taxes like these, with differences, it forces the economy to organize itself in different and, consequently, inefficient ways,” he said.
In addition, the economist recalls that the current Brazilian tax system generates legal uncertainty and, consequently, drives away investments in the country, something important for the growth of the economy.
For Gabriel de Barros, chief economist at Ryo Asset, the tax issue is, in fact, one of the main points to enable quality results in the long term, increasing potential GDP, improving the business environment and reducing the cost of tax compliance. .
The specialist lists another point that he considers relevant for the discussion, the need for Brazil to seek to be on the same level in terms of innovation and technology with peer countries, being a relevant agenda to promote and internalize the gains of the transition to an economy if low carbon, “another relevant vector of economic growth and investment attraction”.
Both economists agree on key points, such as the qualitative and efficient improvement of public spending. This is true for several areas in which public spending, whether federal or subnational, is high, but of low effectiveness. However, experts highlight education as being fundamental to generating long-term results.
The result of the Brazilian GDP made Brazil reach the seventh best performance among the main economies in the world in 2022 in the second quarter of 2022, according to a survey by the risk rating agency Austin Rating.
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.
