According to the Brazilian Central Bank, Brazil's GDP in July 2019 fell 0.16% over the previous month

The Brazilian Central Bank Economic Activity Index (IBC-Br), considered a kind of informal "preview" of Brazil's GDP, fell by 0.16% in July 2019, compared to June of the same year. This is the worst result for the month in the last three years.

In the first seven months of 2019, Brazil's GDP registered growth in just two months, May (1.16%) and June (0.34%). All other months of 2019 showed negative numbers.

According to the Focus Bulletin, a survey conducted by the Brazilian Central Bank, the financial market forecast for 2019 GDP is 0.87%.

Brazil enters in "technical recession" after disclosure of preview of the first quarter of 2019 GDP made today by the Brazilian Central Bank

The Brazilian economy registered a retraction of 0.13% in the second quarter of 2019, according to the Economic Activity Index (IBC-Br) released by the Brazilian Central Bank today. This puts the country in a "technical recession" framework "when you have two quarters in a row of economic contraction i.e. our economy shrinks and things go south."

This index is a preview of GDP, which will be released on August 29 by the Central Bank. The 0.13% decline reported today occurred between April and June 2019 compared to the first quarter of the same year.

The Brazilian Minister of Economy, Paulo Guedes, said today at an event held at the Superior Court of Justice (STJ) that it is not possible to blame the current government for the economic performance of the country.

According to the newspaper Correio Braziliense, Guedes said that "It is still a short time for the government with liberal policies in the economy to present results."

Brazilian services sector falls 1% in June and presents the worst performance of 2019, according to IBGE

The service sector in Brazil had the worst rate for June since 2015 with a drop in the 5 surveyed activities. According to the Brazilian Institute of Geography and Statistics (IBGE), compared to June 2018 (series without seasonal adjustment), the volume of services fell 3.6%. This should again bring down expectations for the 2019 Brazilian GDP.

Economists believe that releasing just R$ 500 per person at FGTS will culminate in another chicken flight to the Brazilian economy

The release of about R $ 30 billion should be positive, but it should not change much the scenario of economic growth of Brazilian GDP in 2019. Overall, the forecast revisions for GDP in 2019 were very marginal. Nothing very expressive. Most analysts point to a growth of about 0.8% of GDP in 2019, ie very small.

For the former president of BNDES and former Minister of Communications, economist and engineer Luiz Carlos Mendonça de Barros, the measures presented by the government are timid to leverage the Brazilian GDP.

Economy Minister Paulo Guedes himself said in early June 2019 that releasing FGTS money before pension reform would be a “chicken flight”. Now, even though the pension reform is not fully approved, the government decides to adopt the measure.

Yesterday, during the measure's presentation ceremony, Guedes said the FGTS withdrawal will be a permanent income, not "chicken flight," as he himself had said.

For Maranhão Governor Flávio Dino, the "release of the FGTS is a good measure, but it is a trickle in the ocean of national recession."

Dino believes that “the expansion of public works is urgent. It is an emergency debt relief program to improve demand. There are ways. But we need to focus on Brazil. ”

Dino thus criticizes the policy of the current government, which is openly aimed at pleasing the international bond market.

Flavio Dino was verbally attacked by President Bolsonaro during a private conversation with the Chief Minister of the House, Onyx Lorenzoni, captured by TV microphones a few days ago.

Brazilian financial market raises GDP projection to 2019 for the first time in 20 weeks

The Focus report, published by the Brazilian Central Bank every Monday, indicates that projections by Brazilian financial market analysts estimate GDP growth to be 0.81% to 0.82% by 2019. The same analysts consulted by the Brazilian Central Bank continue betting on the growth of 2.10% of the Brazilian GDP in 2020.

The change is related to the approval of the first shift of the Pension Reform by the Chamber of Deputies of Brazil. Even so, the performance of the Brazilian economy is still very poor. Many analysts expect the government to present some kind of measure that could warm the Brazilian economy a bit more.

Economists lowered the estimate for the Brazilian official inflation index (IPCA), which was down to 3.78%. A week ago it was at 3.82%. This year's central target is 4.25%, with a tolerance of 1.5 percentage points to more or less.

Many analysts believe that the Central Bank should, at the next Monetary Policy Committee meeting (Copom), which takes place in the last two days of July 2019, should lower the Selic rate of the Brazilian economy that is now at 6, 5% per annum.

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."

The number of companies decreases for the second consecutive year in Brazil

According to the Central Business Register (CEMPRE), released today, June 20, 1919, by IBGE, the total number of companies in activity in Brazil was 5 million in 2017, the worst result since 2010, when it totaled 5.1 million. Since the beginning of the economic crisis in 2014, the number of companies declined by 74.2 thousand and the salaried population decreased by 3.2 million.

According to the IBGE News Agency, "the study shows that between 2007 and 2013, there was a continuous growth in the number of companies [in Brazil], from 4.4 million to 5.4 million. In 2014, however, this number fell by 288, 9 thousand organizations and, despite the small increase of 11.6 thousand in 2015, in the following two years the number dropped again to 64.4 thousand in 2016 and 21.5 thousand in 2017."

According to economist Laura Carvalho, the "brutal fall in growth projections" in Brazil combined with the possibility of "a new recession in the first quarter of 2019 brought to the surface the vicious circle caused by insufficient demand in the Brazilian economy."

In the first quarter of 2019, Brazil GDP fell by 0.2%. Two consecutive quarters of contraction mean a technical recession. For many economists, 2019 is already a lost year for Brazil. They believe that a possible economic recovery will only come in 2020.

Brazil spends 4.1% of GDP to pay interest and public debt charges in 2018

A report by the Federal Audit Office (TCU) shows that in 2018 the federal government spent $ 279.6 billion on interest and debt charges. The figure represents 10.1% of all committed expenditures (R $ 2.7 trillion) and 4.1% of GDP (Gross Domestic Product).

Gross debt, which accounts for the liabilities of federal, state and municipal governments, rose in March, according to data from the Central Bank (BC), released 30.Apr.2019 to R$ 5.431 trillion. The value corresponded to 78.4% of the Gross Domestic Product (GDP, the sum of all goods and services produced in the country), 0.9 percentage points more than in February. This ratio between debt and GDP is the highest in the historical series, which began in December 2001.

The same report indicates that tax waiver reached R$ 314.2 billion, corresponding to 25.6% of net primary revenue and 4.6% of GDP. According to the TCU, the waiver of social security contributions surpassed R$ 62 billion in 2018.

Growth forecast for the Brazilian GDP is reduced for the 15th time in a row and now stands at 1%

The financial market's estimate for economic growth in this year reached 1%, after 15 consecutive reductions. This is what the Focus bulletin shows, which is a result of the Brazilian Central Bank's research to financial institutions, released every Monday.

In early 2019 financial institutions, according to this same bulletin Focus, forecasted a 2.6% growth in the Brazilian economy this year. However, this bet on the world of finance was mistakenly based on a very positive judgment of Jair Bolsonaro's ability to lead the country's economy. With the passage of the months, this bet turned out to show that the analyzes were, for the most part, politically charged and not based on more rational forecasts of the Brazilian economic indicators.

For many analysts, Brazil is flirting with a new recession. Domestic demand continues to decline considerably and has lasted for two consecutive quarters. This has already been pointed out by Goldman Sachs.

To make matters worse, according to journalist Denise C. de Toledo, the "Preliminary Employment Indicator (IAEmp) recorded the 4th monthly drop followed in May, according to the FGV. The index fell 6.7 points in May to 85.8 points, the lowest level since June 2016 (82.2 points). Reflection of the expectation of weak expansion of the economy".

Projection of the Brazilian GDP for 2019 reduces for the 14th consecutive week

According to the Focus Bulletin, a report produced by the Brazilian Central Bank, the Brazilian GDP growth estimate for 2019 was reduced for the 14th consecutive week. The new forecast, according to the report that refers to the projections made by financial institutions in Brazil, the GDP of 2019 should stand at 1.13%.

Four weeks ago, the expectation was 1.49% of GDP growth in Brazil. This is the lowest projection since January 2019.

According to economist and partner of the consultancy Tendências, Alessandra Ribeiro, "the numbers of the first quarter reinforced the picture of a weak economy" in Brazil.

The chief economist of Fator Bank, José Francisco de Lima Gonçalves, believes that the investment in Brasil "is performing poorly and I do not see how this can be reversed this year and next year."

Brazil, 2019: another lost year

After the IBGE announced today that Brazil's GDP fell 0.2% in the first quarter, in its first decline since 2016,  analysts are now saying the government has to take urgent steps to recover the economy, but even if all of this done the recovery of the Brazilian economy should only happen in 2020 because by 2019 the situation should not improve. Employment, for example, may get worse than in 2018.

According to José Luis Oreiro, professor of economics at the University of Brasília (UnB), "2019 is a year that we already lost. It is a year of very low growth, I think that 1% is the growth forecast ceiling for 2019 but it's going to be less than that. We can get out of this? Yes, but we (the government) have to create aggregate demand stimuli".

In the evaluation of the economist José Roberto Mendonça de Barros, founder of MB Associados, 2019 is a lost year for the economy. According to him, the current administration did not have the political ability to make the ideal Pension Reform in the early months of 2019. Now, the most optimistic prediction is that the Pension Reform should only be voted by the end of the year.

There are also economists who already speak of a "recession smell," such as Zeina Latif of XP, or that Brazil would already be in a "possible technical recession," according to Sérgio Vale of MB Associados.

Many analysts, who at the beginning of the year were betting heavily on the current government, now say that Brazil's economic momentum is very bad, that government performance is discouraging and that the economy stands at a low point and with no expectation of growth.

Brazilian GDP falls 0.2% in the first quarter of 2019

According to information published today (30.May.2019) by the Brazilian Institute of Geography and Statistics (IBGE), the GDP (Gross Domestic Product) in Brazil fell by 0.2% in the first quarter of 2019 in relation to the previous three months.

This is the first negative result of the Brazilian GDP since 2016. The figures released by the IBGE point to the risk of Brazil again suffering from the recession (when the country registers two consecutive quarters of decline in economic activity).

According to the IBGE, the rupture of the Vale dam in Brumadinho (MG), and its consequent effect on the result of the industry is among the main factors that brought down the economic activity of the country.

This landslide of Brumadinho dam of Vale occurred on January 25. 244 people died. The tragedy was a direct result of the lack of public oversight and the policy of easing environmental licensing laws, which is widely advocated by the current government of Jair Bolsonaro and his Environment Minister Ricardo Salles.

Among other things, Salles favors "self-certification." This means that the company itself will inspect its dams without the need for any prior environmental inspection by the government agencies for certain types of projects. According to Exame magazine, "not even the worst socio-environmental tragedy in Brazil, provoked by Vale in Minas Gerais, made the minister change his mind."

Now, with the possibility of a new tragedy in the Upper South dam of the Gongo Soco Mine, in Barão de Cocais, Minas Gerais, which can break at any moment, it puts the lives of the region's inhabitants at risk, it can cause another immense disaster environmental and make the Brazilian economic situation even worse.

GDP growth projections in Brazil fall for the thirteenth consecutive time

Financial market analysts heard by the Brazilian central bank downgraded by 0.01 percentage point the forecast for Brazil's Gross Domestic Product (GDP) in 2019. According to the Focus Bulletin, released today, May 27, the Brazilian economy should move forward 1.23% in 2019. Last week, the forecast was 1.24%.

The Focus Bulletin is a weekly report released by the Brazilian Central Bank. It indicates the expectations of more than 100 institutions of the Brazilian financial market on various indicators of the Brazilian economy, such as GDP, inflation, exchange rate and Selic (basic interest rate).

The errors in the Brazilian GDP growth forecasts

In the first five months of 2019, market economists have changed their projections for Brazilian GDP growth by 11 times. Their mistake was brutal: they predicted GDP growth by 3% in January 2019, now they have changed to something around 1.45%. These same analysts and economists who do not meet their four months forecast point out that the approval of the Pension Reform will solve all of Brazil's economic problems. Many times, it seems that these analysts use more of the economic terror then rational arguments based on numbers and facts.

Now many of these economists are trying to explain their misguided predictions of recovery. Many of them seem bewildered, with inaccurate explanations of the ever worse results of GDP. This indicates that economists, financial market analysts, and Brazilian businessmen were very naive in their political analysis, and unable to rationally analyze the risk that Bolsonaro's victory could represent for the Brazil economy.

According to the greatest Brazilian historian, Sérgio Buarque de Holanda (1902-1982), Brazil has no conservatives, but "backward people." In his speech, Holland referred to some figures of the Empire who defended slavery in Brazil. Now, the picture repeats itself. Many of these economists, analysts, and business people have championed Bolsonaro's candidacy even though publications such as The Economist and The Financial Times have pointed to the risks that Jair Bolsonaro's victory might represent.

For the political scientist and professor at the Department of Political Science at Unicamp and a researcher at Cebrap, Andréa Freitas, in denying any political coalitions, Bolsonaro set up his own trap. He does not want to negotiate with other political groups.

Added to this there is an undeniable inability of the current government to coordinate the National Congress politically. Besides Bolsonaro does not indicate that he will make an effort to build policies along with other parties, the current president argues that any type of political negotiation is necessarily corrupt. Not sharing power with the other political parties will prevent or make very difficult any measure proposed by the current government.

Another important factor is the party of President Jair Bolsonaro, the PSL. Basically made up of first-time deputies, with no experience in the political game, the PSL is a confusing political party. Many of his deputies are moving in opposite directions in an attempt to secure influential positions in the House of Representatives. Some of these positions are even contrary to government proposals.

Inefficiency in public spending costs billions to Brazilians according to IDB

A study by the Inter-American Development Bank indicates that inefficiency in public spending causes a loss of 3.9% of Brazilian GDP. The survey points out that in Brazil, inefficiency in the use of these resources generates a loss of US $ 68 billion per year, equivalent to 3.9% of GDP (Gross Domestic Product).

The IDB says that Brazil is, in relative terms, the country with the highest spending on Social Security in Latin America, spending 7 times more on the older population compared to the youngest. This framework points to the undeniable need for a Pension Reform.

According to the Folha de S.Paulo newspaper, according to the IDB calculations, Brazil could save the equivalent of 1.6% of GDP if it guaranteed that the resources of its income transfer programs would be passed on to the poorer sections of the population, diversion to the richer strata. For the bank, this is what happens with subsidies and tax benefits granted by the Brazilian government, for example, to sectors such as the automobile industry.

Reduction in the pace of growth of the global economy should worsen the situation of the Brazilian economy

The resurgence of the commercial confrontation between China and the United States added to the slowdown of the European economy will affect the growth of the Brazilian GDP.

In Brazil, the Social Security Reform proposed by Jair Bolsonaro's government has not yet been able to raise enough votes in Congress to approve this change. With this, the country continues with serious problems in its public accounts.

The fact that the Brazilian reform agenda does not move in the National Congress greatly affects investments in the country.

The average annual GDP growth since 2016 is at 1.5%. By 2019, the forecast, which at the beginning of the year reached 3% GDP growth, is now around 1.5%. There is a general perception of distrust in Brazil. Few economic agents believe that the country will leave this almost stagnant picture.

To make matters worse, the unemployment picture continues to rise, an indicator that points to a stagnant economy. The Brazilian industry, an important driver of the economy, is experiencing an evident process of the deindustrialization of the country. This reduces the size of Brazil in the world economy.

So far, the current government has not presented any strong policy aimed at the development of the Brazilian economy. There is, for example, no inducement of growth through state investment in infrastructure works.

To get an idea of what could be done, Brazil's numbers on basic sanitation have stagnated for about three years, which means that little or no investment has been made in this sector. There are currently 35 million people in Brazil without access to the drinking water network, 95 million people live in places without sewage collection, and only 46% of sewage is treated in Brazil.

Citi Brazil again lowers its estimate for the growth of the Brazilian economy

Citi Brazil now expects Brazil's Gross Domestic Product (GDP) to increase by 1.4% in 2019. This forecast is lower than the 1.8% forecast for April, well below the 2.2% previously estimated by the same bank at the beginning of the year.

The weaker growth is, according to Citi, the steady increase in the estimates for the unemployment rate in Brazil.

The Citi also predicts a 30 percent probability that the Brazilian Central Bank will start cutting interest rates in the second half of 2019.

Brazilian GDP may have negative results in the first quarter of 2019

Several Brazilian banks reduced their forecasts for the Brazilian GDP growth in the first quarter of 2019. In recent days, Itaú has reduced its expectation of 2% growth of Brazilian GDP in 2019 to 1.3%. Safra bank lowered its forecast from 2% to 1.5%. Bradesco, which projected a growth of 2.4% in GDP growth in Brazil in 2019, changed its expectation to 1.9%.

The worst projection was due to Banco Fator, which had forecast a growth of 1.7% of the Brazilian GDP in 2019. Now, Banco Fator understands that Brazilian GDP growth should be at 1.3% in 2019. The Factor also pointed out that the first quarter of 2019 should be marked by a decrease of 0.7% in GDP.

Because of these reductions, there is, therefore, a large decrease in bets favorable in relation to Brazil between domestic and foreign investors.

The current uncertainties in the political scenario and the reform agenda certainly greatly delay economic growth because it greatly reduces growth expectations for the Brazilian economy. However, this is the third consecutive year in which market expectations are reduced considerably. This points to a recurring error in the analyses made by economists in relation to the Brazilian political structure.

The financial market players erred in analyzing the Temer government and now erred again in expecting Jair Bolsonaro's presidency a minimally organized government. So far, what has been seen was a lot of confusion, unpreparedness and a tendency to give up the liberal agenda against any pressure, as occurred in the case of Petrobras.

According to Reuters, "although Bolsonaro vowed orthodox economic policies in his far-right presidential campaign last year, his first 100 days in office have raised concerns that more populist factions in his government may have an upper hand over free-market voices".

This shows a huge gap between market analysis and expectations and the real capacity for reform and to carry out economic policies that Brazilian politicians have.

Brazilian Stock Exchange (Bovespa) have the largest fall of the last two weeks

The Ibovespa, index that measures the price variation of the main shares traded on the Bovespa dropped 1.11% yesterday, April 3, 2019. The market saw with pessimism the statement of Economy Minister Paulo Guedes, who said that he will not assume the position of articulator of the Pension Reform in the Brazilian National Congress.

Also yesterday, the IMF reduced Brazil's GDP forecast in 2019. According to the IMF's World Economic Outlook report, Brazil's GDP growth forecast is now 2.1% in 2019. The forecast made in January 2019 by the same IMF was that the Brazilian GDP would grow around 2.5% this year.

In the Bolsonaro administration, there is no economic development plan for the country. Economy Minister Paulo Guedes believes growth will only come after the approval of the Pension Reform. However, several Brazilian economists like Nelson Marconi and Paulo Feldmann believe that the government should adopt other measures, in addition to the Pension Reform, to combat unemployment in the country.

The same IMF report pointed out that Venezuela's GDP fell by 18% in 2018 and should fall 25% in 2019. As a result of these declines, Venezuela's economy in 2020 will be almost half of what it was in 2017.

The inflation forecast by the IMF for Argentina in 2019 is 43.7%. Because of this, the IMF decided to release a US $ 10.8 billion pass-through to the Macri government, which was unable to resolve the economic crisis and faced a decline in its popularity. Over the past six months, some 2.7 million Argentines fell under the category of poor and destitute. In total, there are already 12.9 million poor and indigent people in the country with just over 44 million inhabitants.

Projection of the Brazilian GDP falls for the 6th consecutive time

According to the Focus bulletin published by the Brazilian Central Bank, for the 6th consecutive week, a survey conducted by the institution with market analysts consulted reduced the growth projection of the Brazilian economy. According to the Focus bulletin, the country's Gross Domestic Product (GDP) is expected to advance 1.97% in 2019.

However, there are analysts in Brazil working with estimates below that number, around 1.5%. The slow pace of economic recovery and instability in the political environment have led to declining expectations.

Due to these prognoses, the Government of Brazil announced the blocking of R $ 29.79 billion in this year's Budget. One of the most significant decreases was in the area of Agriculture. The growth projection fell from 2% to 1%. For the industry sector, the expectation of growth for the year 2019 went from 2.9% to 1.8%.