Unemployment and low income explain further decline in the service sector, says economist

Unemployment and low income explain further decline in the service sector, says economist

The 0.2% drop in the service sector from January to February, according to the Brazilian Institute of Geography and Statistics (IBGE) this Tuesday (12), can be explained by the current “deterioration of the economic scenario”, according to with the coordinator of the economics course at Insper, Juliana Inhasz.

“With the acceleration of inflation, the economy needs monetary adjustments, interest rates rise and put pressure on the productive sector. This has made families reorganize the consumption basket,” he explained, in an interview with CNN Radio.

Inhasz stressed that unemployment, although it has fallen in recent months, is still high, and “even employees have a lower average income”.

“Brazilians have fewer resources to consume what they need and want, and the service sector is what people cut back, because they prioritize other things that are essential,” he added.

The economist assessed that services “compose a sector that, despite being the flagship of the Brazilian economy, led the timid economic recovery of last year, but which suffers a lot from the replacement and drop in income”.

The professor still believes that inflation will be around 13%, with an upward bias “depending on how the inflationary process continues”.

Source: CNN Brasil