Brazil's GDP growth to be the lowest in 120 years

A projection by the Instituto Brasileiro de Economia (Brazilian Institute of Economics) of the Fundação Getúlio Vargas (Ibre/FGV) indicates that the average growth of the Brazilian economy should be only 0.9% per year between 2011 and 2020. If everything continues as it is, will have its weakest performance in 120 years.

According to Ibre/FGV analysis, the weak performance of the economy reflects the successive deficits in public accounts since 2014 and two consecutive years of recession in 2015 and 2016.

This rate is lower than the 1.6% of the so-called 'lost decade' in the 1980s when the Brazilian government declared a moratorium and suspended the payment of international creditors.

In 2015 Brazil's GDP fell by 3.5%. By 2016, the fall in GDP was 3.3%.

According to the Ibre/FGV researcher, Marcel Balassiano, the country would have to grow around 5.7% in 2019 and 2020 for this decade also not be considered a lost decade.

Overall, Brazil's economic recovery has been slow, the industry is struggling to catch up, and the Brazilian state is headed for a few more years of fiscal deficits.

Dollar reaches R$ 4.00 and scares Brazilian economists

A public discussion between the President of the Republic Jair Bolsonaro and the president of the Chamber of Deputies Rodrigo Maia made the financial market nervous this week.

Yesterday, March 28, the tourism dollar reached R$ 4.20 and euro at R$ 4.70. As a result, the day was turbulent in the Brazilian financial market.

Today, March 29, the commercial dollar opened the session with a fall of 0.84%, being traded at R $ 3.8830 for sale and R $ 3.8810 for purchase.

To make matters worse, unemployment continues high despite improvements in recent months. In the quarter ended in February, the unemployment rate in Brazil was 12.4%, according to data from the National Survey for Continuous Household Sample (Pesquisa Nacional por Amostra de Domicílios Contínua - PNAD) published today by the Brazilian Institute of Geography and Statistics (IBGE). In the same period in 2018, the unemployment rate measured by PNAD was 12.6%.

According to Eduardo Moreira (former partner of Banco Pactual), there is a fugue of investors from  Brazil. For Moreira, a critic of the Bolsonaro administration, the first three months of government did not present any type of project and indicated a fragility in the president's capacity for articulation with the National Congress.

Cost of living in Brazil: beans and potatoes

The rice and beans dish is a combination consumed daily by Brazilians. This dish is now more expensive because beans are now more expensive.

According to the Broad Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo 15 - IPCA-15), the price of this basic item, which had already registered a 34.56% increase in February, rose 41.44% in March.

This was one of the reasons for the IPCA-E, which is the IPCA-15 accumulated quarterly, to be 1.18%, above the rate of 0.87% registered in the same period of 2018.

Another item that also had a price increase was the potato. The kilo of this product rose 12.39% in February and 25.59% in March.

As a result, previous official inflation in March (IPCA-15) showed a 0.54% increase in prices in relation to the previous month

Cost of living in Brazil in 2019

Inflation has rebounded in Brazil. According to the Brazilian Institute of Geography and Statistics (IBGE), official inflation accelerated to 0.43% in February 2019.

High food prices and school fees were the main factors for the month's high. In 12 months, the accumulated IPCA (National Wide Consumer Price Index) rose to 3.89%. Despite this rise in prices, inflation is below the government's target for 2019: 4.25%.

According to Fábio Romão, an economist at LCA Consultores, fuel prices are expected to pull up in inflation now in March.

The constant crisis produced by the current government and the possible difficulty to approve a profound Pension Reform may make a more moderate inflation picture unlikely.