US Dollar continues high in Brazil

The rise in the dollar increases the cost of living in Brazil. Many products sold in Brazil have their prices linked to the US dollar quotation. Drugs and fuel prices are deeply affected by the dollar's price in Brazil.

Foreign capital flows are very important for Brazil. However, the slow pace of Pension Reform in the National Congress drives international investors to become more pessimistic about making new investments in Brazil.

Since May 16, the price of the US dollar in Brazil has exceeded R$ 4.00 and remained above this level. Today, the dollar is up in the Brazilian financial market.

Many analysts are saying that it will only return to a lower level if there is an improvement in the climate abroad, with a possible understanding between China and the United States, or if there is greater confidence in the approval of the Pension Reform in Brazil.

Brazilian legislature approves tax reform without the help of Jair Bolsonaro's government

Without the help of the government of President Jair Bolsonaro, the Constitution and Justice Commission of the Chamber (CCJ) of Deputies approved the admissibility of the tax reform. 

The proposal provides for the replacement of five taxes by one, the IBS, within ten years. The objective is to simplify and make more transparent the collection of taxes.

The text, authored by deputy Baleia Rossi (MDB-SP) and the economist Bernard Appy, director of the Center for Fiscal Citizenship (CCIF), goes to the special committee without any help from the government, that now is seen as an impediment to the adoption of reforms.

The Chamber of Deputies, therefore, decided to carry out its own economic agenda without any articulation by the government of Jair Bolsonaro. 

On the day Congress began to vote on a proposal for tax reform, the Federal Revenue Secretary of the current government, Marcos Cintra, declined an invitation to discuss the issue in the Chamber of Deputies. Thus, the only government representative in the area decided would not participate in the debate and approval of the reform made today in the CCJ.

After approval of the text in the CCJ, Cintra said that the government will support tax reform approved today. Cintra's speech was seen as paradoxical.

Brazilian public banks will have to return to the public coffers around R$ 20 billion in 2019

According to a report published today (January 22, 2019) by the newspaper Valor Econômico, Brazilian public banks will have to return to the Union at least R$ 20 billion in 2019.

Public banks that must return money to the public coffers are Caixa Econômica, Banco do Brasil, BNDES, Banco do Nordeste and Banco da Amazônia.

The funds are part of R$ 86 billion in loans that the institutions received from the federal government as a capital increase during the management of Dilma Rousseff (2011-2016).

According to the publication, the money returned will be used to crush the public debt. In 2019, the government is allowed to stay in the red by up to R$ 139 billion.

Brazilian government announces thousands of state layoffs

In the midst of one of the biggest crises in the history of the Brazilian labor market, the current government announced a severe cut of personnel in Brazilian state-owned companies. The measure is expected to reach more than 25,000 employees by the end of 2019, according to data from the companies and the Ministry of Economy compiled by the "G1" website.

The federal government has already approved seven programs of voluntary dismissal or incentive retirement in companies such as Correios and Embrapa. The official projection is that the downsizing will bring savings of about $ 2.3 billion annually to public coffers.

In the short term, reducing public service employment, particularly during the current time of severe financial crisis, adds workers directly to the Brazilian unemployment lists. It is a measure that reduces consumption and further affects the economy, amplifying the effects of a possible return to recession.

Currently, unemployment reaches 13.4 million Brazilians. Of these, 3 million have been for 2 years or more without formal employment.

Income inequality in Brazil is the highest in seven years

According to a survey by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre/FGV) released today, income inequality reached the highest level in seven years. The Gini index, which stood at 0.627 in the first quarter of 2019, is the highest since the first quarter of 2012, the beginning of the historical series when the number was 0.608. According to the Gini index, when the closest to 1 more unequal is the country.

The main reasons are the upward unemployment rate, hitting 12.7% in the first quarter of 2019, and the prolonged effects of the recession that began in 2014.

The projected GDP growth in 2019, which is around 1% according to several analysts, will not change this picture. Therefore, the picture of inequality must remain in Brazil at least until 2020.

Brazilian government actions to stimulate job creation undergo cuts

A survey of the Open Accounts Association points out that 25.2% of resources aimed at stimulating job creation. The largest contingency was in the amount allocated to the integration system of employment, labor, and income, which lost R$ 44.8 million. The project to modernize and expand the service network of the unemployment insurance program, of the Brazilian National Employment System, lost R$ 9.6 million. The resources for public registrations in the area of work and employment were reduced by R$ 4.1 million.

The note on contingency in government actions aimed at job creation was seen as discouraging by many economic analysts. Especially when Brazil is experiencing an increase in the number of people looking for work and the federal government decides to cut R$ 59.2 million on actions to stimulate the opening of new jobs in the market.

Jair Bolsonaro moves towards political radicalization

According to the newspaper Folha de S.Paulo, "the text distributed by the President of Brazil, Jair Bolsonaro, to the allies was read by leaders of other Brazilian parties as a nod to radicalization." For politicians of those parties, Bolsonaro wants to return to the command of Brazilian politics using his public support.  According to Folha de S.Paulo, audiences on the internet of Bolsonaro supporters say that "the rotten part of the Congress and Senate, plus the STF (Federal Court of Justice) with the support of Globo Network, are uniting to try to overthrow the captain (Bolsonaro) and we will not let."

Many Brazilian political analysts are comparing the text published by Bolsonaro with the resignation letter of former Brazilian president Jânio Quadros, who also tried, through a text that spoke of "hidden forces" that made it impossible to administer Brazil, win the support of the population. The strategy did not work. Former president Fernando Collor de Mello also tried something similar and the shot backfired. In none of these cases, the presidents gain popular support.

Other analysts believe that this new Bolsonaro strategy was prompted by fears of what might happen in the ongoing investigation of the Rio de Janeiro Public Prosecutor's Office, which may involve Michelle Bolsonaro and Flávio Bolsonaro, the president's wife and son.

Brazilian government self-destructs

Even with the consensus in the Brazilian society of the need for reforms, the government of Jair Bolsonaro proved completely unable to advance the reforms. Today, the president has published a text in which he affirms that Brazil is an "ungovernable" country.

The government of Jair Bolsonaro sold the idea of would go government without doing any political negotiation. This uncompromising stance coupled with the numerous errors and corruption scandals involving ministers and people close to the president put the current government on the path of growing unpopularity.

Brazil's current fiscal framework is unsustainable. The expectation of the approval of a Pension Reform still keeps the economic scenario minimally stabilized. If this does not happen, the trend is that the Brazilian economic scenario will get much worse.

Now comes the news that the National Congress intends to officially take center stage in the discussion on Pension Reform. Deputies of the Special Commission advocate abandoning the government project and instead put a substitute - alternative text to the Proposed Amendment to the Constitution (PEC) number 6 for voting. They do not want to approve the Reform proposed by President Jair Bolsonaro, who has a bad relationship with Congress.

IPC-Fipe retreats in the second week of May

The Consumer Price Index measured by the IPC-Fipe Foundation, in the city of São Paulo, the largest city in Brazil. recorded 0.15% in the second week of May, against 0.20% registered in the first week of the month.

Housing and Food pulled the fall of the IPC-Fipe. While Transportation, Personal Expenses, Clothing, and Education pulled the index up.

More than 5 million people have been looking for a job in Brazil for over a year according to IBGE

According to figures announced in the last hours by the Brazilian Institute of Geography and Statistics (IBGE), 5.2 million unemployed have been seeking employment for more than a year in Brazil. These citizens represent 38.9% of the total unemployed in Brazil. Another 3.3 million people have been unemployed for two years or more (24.8%), up 9.8% over the first quarter of 2018. In addition, 6 million people are in the line of unemployment for more from one month to less than one year (45.4%), and 2.1 million have been seeking employment for less than a month. The number of unemployed in the country rose to 13.4 million in the first quarter of 2019 in Brazil.

According to the IBGE, unemployment increased in 14 of the 27 units of the federation in the first quarter. The largest women affected by this problem were women. While unemployment averaged 12.7% in the country, among women the rate was 14.9%. Among men, it was 10.9%. According to the survey, women were the majority in the working-age population in Brazil (52.4%), but they were also the largest (52.6%) of the unemployed population.

The financial market in Brazil falls due to the inability of the Bolsonaro government to calm the country

The Brazilian stock market operated today below 90,000 points, the lowest level since January 3, 2019. In a few months, President Jair Bolsonaro burned much of the support he received from the financial market.

The economic deterioration in the Brazilian scenario, the commercial war between the US and China, the Brazilian government's inability to carry out reforms and the huge demonstrations that took place yesterday in several Brazilian cities showed the fragility of the current government of Jair Bolsonaro.

For that reason, in the coming weeks in Brazil, the country's economic scenario should be marked by volatility in the financial market. There is nothing that can reassure the Brazilian financial market in the short term.

To many analysts, the president Jair Bolsonaro has moved beyond any limits after he called thousands of people who took to the streets to speak out against cuts in the education of idiots and imbeciles.

To make matters worse, Flávio Bolsonaro, who is senator and son of the current president seems to be involved in a corruption scandal. Yesterday, a report from the Rio Public Prosecutor's Office (MPRJ) pointed out that there are indications that Flávio Bolsonaro bought and sold real estate to launder money.