Unemployment expected to continue to fall in Brazil and rise in the US and Europe, analysts say

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THE unemployment rate of Brazil has dropped just over four percentage points since the beginning of 2022, in a trend that is expected to continue in the short term, going against what was expected for developed countries, say experts when CNN Brasil Business .

Bruno Imaizumi, economist at LCA, points out that Brazil still has one of the highest unemployment rates in the world, despite the recent drop.

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Currently at 9.1%, according to the most recent data released by the Brazilian Institute of Geography and Statistics (IBGE ), the unemployment rate reached the lowest value since 2015, but still remains high compared to large economies.

On the other hand, developed countries should begin to see an increase in their unemployment numbers, reflecting a scenario of economic slowdown linked to the effort to combat record levels of unemployment. inflation .

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Causes

Imaizumi notes that the downward movement in unemployment rates was not a phenomenon unique to Brazil, and is linking both to a recovery in post-World War II economies.pandemic regarding changes in the labor market itself.

“Rates today are at values ​​lower than the historical averages due to these strong changes”, observes the economist.

Specifically in the case of Brazil, the specialist CNN in economics Sergio Vale attributes the drop in unemployment to the “greater growth of the economy that we are seeing”, with revisions of projections for the GDP supported by a strong recovery in the services and fiscal stimulus.

Imaizumi also points out that, in addition to the more favorable economic environment and the effect of reforms in the labor area, many people also chose to stop looking for a job, thus leaving the unemployment statistics and helping to reduce unemployment.

“The dynamics of unemployment depends on the pace of economic growth”, points out Rodolfo Margato, economist at XP. With a more heated activity, it is natural for unemployment to fall.

In addition, Brazil has room for a drop in the rate due to the previous high level. In the case of developed countries, many are at levels close to the so-called full employment, when everyone looking for a job gets it in a short period of time.

There are cases like the United States where there is even an excess of job vacancies, generally unfilled due to low pay.

Considering data from the Organization for Economic Cooperation and Development (OECD ), the members of the G7, the European Union and the organization itself have lower rates than Brazil currently.

Vale explains that the dynamics of commodity prices ended up impacting Brazil and developed countries differently.

As a major exporter of commodities Brazil ended up benefiting from higher prices, generating more income and employment.

In the developed countries, which consume more than they produce commodities, the rise was harmful, impacting inflation, raising the need to raise interest rates, which in turn “will lead to high unemployment”.

Looking ahead to the coming months, Imaizumi assesses that the global slowdown as economies raise interest rates to deal with inflation could limit consumption, “affecting economic activity and hitting the job market”.

As a result, the tendency is for these countries to see their unemployment rates rise. In the case of Brazil, he expects the country to still see setbacks, but slower. For 2022, the LCA projects a rate of 9.1%, ending 2023 at 8.7%.

Even so, the economist highlights that “in the macro context, our situation [no mercado de trabalho] is more fragile than in large economies”.

Margato also expects the Brazilian unemployment rate to continue falling, but less so. XP expects it to end 2022 at 8.5%, with 8% next year.

He says that developed countries should see growth in unemployment, but that their rates will continue to be lower than those of Brazil. In the United States, for example, it is expected to end 2023 at 4.5%.

“These are different trends for the job market, but here they are still at a higher rate. We also have other problems to deal with, such as the higher proportion of informality, labor qualification problems”, he points out.

Source: CNN Brasil

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