The financial market in Brazil celebrates the approval of runoff of Pension Reform by the House of Representatives; Copom report presented by the Brazilian Central Bank's points toward the perspective for new cuts in the basic economy rates, the Selic

After a vote of 370 votes in favor and 124 against, the Brazilian Chamber of Deputies approved the Social Security Reform. Highlights will now be voted on, which may change some points of the approved text.

According to the website Poder360, The Central Bank announced through the report of the last Copom (Monetary Policy Committee) meeting that the basic interest rate may fall again in the coming months. At the committee's last meeting, interest rates fell from 6,5 to 6 percent a year. This is the lowest rate in the historical series.

According to a study by economist Affonso Celso Pastore, the Brazilian economy will take a long time to improve. Latest indicators worry and point to impending economic recession. To make matters worse, weak data on Brazilian industry, trade, and services, the main drivers of the country's growth, point to a fall in Gross Domestic Product in the second quarter of 2019.

Therefore, even with the prospect of interest rate cuts by Copom, the tendency is for the Brazilian economy to continue at a very weak pace.

Brazilian GDP should decrease in the second quarter, says IFI (Independent Fiscal Institution)

The IFI (Independent Fiscal Institution), an organization linked to the Brazilian Federal Senate, published a report in which it suggests a new GDP decrease (Gross Domestic Product) in 2019. In the first 3 months of the year, there was a reduction of 0.2%.

If the report published on June 15, 2019, Brazil would be returning to live in a recession, when there have been two consecutive quarters of decline in GDP in relation to the previous quarter.

According to the report, Brazilian industrial production "remains constrained by uncertainties and weak external demand, while confidence indicators indicate consumer and business pessimism, especially with future economic conditions."

For Affonso Celso Pastore, president of the Public Policy Debate Center and the AC Pastore consultancy, Brazil today has "a per capita income that is 9% below the threshold it was at the beginning of the recessive cycle (2014), and that is, we can not expect family consumption to be a driving force in the economy. The country has a very large idle capacity in the industry, and the maturing of infrastructure investments is long (it takes time), so we do not we have the investment being a driving force. We also do not have an impulse from exports. And finally, it is not possible to use fiscal stimuli because the government is doing the opposite, it is making an adjustment, is cutting spending".

To make matters worse, according to economist Rosa Chieza, from the Federal University of Rio Grande do Sul, Brazil today has a "tax burden of 32%, a taxpayer that receives up to R $ 2,000 earmarking almost 50% of its income While we have a huge gap in taxation on income and equity, we need to put more slots in the income tax table, increase the exemption rate, but raise the tax rate, as it spends all its income on consumption of goods and services. a maximum rate of 27.5% to 40%, in order to reduce inequality, while also we charge more from profits and dividends."