Brazil’s economy: what are the financial challenges for the next president?

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Although it is currently positioned as one of the countries that has had the best results despite the pandemic crisis and the war in Ukraine, hunger and poverty have increased in recent years. Without many explanations, the country registers a decrease in its inflationary levels and the unemployment rate has also been reduced.

Since Bolsonaro took office in January 2019, his Administration has made a host of changes that are reflected in the country’s statistical reports; However, analysts believe that some of these reports are contradictory, because while inflation, energy costs and unemployment are falling, the same data is through the roof for the rest of the world.

Jair Bolsonaro welcomed the country with an annual inflation rate of 11.6%, and although the rate reached 13.2% during his tenure, it currently boasts inflation of 7.17%, one of the lowest in the region. .

According to a report published in July of this year by the Getúlio Vargas Foundation Center for Economic Studies (FGV), in the first years of the Bolsonaro government (2019-2021) there were 9.6 million “new poor”.

In October 2021, Bolsonaro announced that the ‘Bolsa Familia’ program, which was implemented in the administration of leftist Luiz Inácio ‘Lula’ Da Silva (2003 – 2010), was coming to an end.

The program, which had been in force for 18 years, allowed nearly 15 million citizens to receive income transfers from the State, led to a 10% reduction in inequality, and helped to get the South American country off the map. World Hunger Campaign carried out annually by the Food and Agriculture Organization of the United Nations (FAO).

With the elimination of the old plan, the Bolsonaro program called ‘Auxilio Brasil’ was established, in which a reallocation of 1.7 million dollars in social aid was carried out that began as of November 2021, which represents an increase of 47 dollars in social assistance for Brazilians.

The plan was also developed to achieve a reduction in taxes on fuel, electricity, gas, telecommunications and public transport.

The government opposition has said that this was a political move in which Bolsonaro planned to win the approval of the most vulnerable for the presidential elections in which he seeks to be re-elected, while economic experts believe that the low inflation that Bolsonaro boasts may be at risk.

With the increase in tax aid that reaches Brazilians, the purchasing power of people increases, and therefore, it can pay for inflation to rise in the coming months, with high inflation, interest rates would also take an upward path , according to the most common behavior of the economy.

Brazil in figures

According to the National Continuous Household Sample Survey, around 33.1 million Brazilians suffer from hunger, which represents 15% of the population. In addition, the number of Brazilians who suffered from some type of food insecurity is much higher: it exceeded 60 million, that is, one in every three citizens has problems eating.

Brazil figures, pre-election outlook © France 24 English

Brazil’s Gross Domestic Product is expected to be 2.7% by 2022, which, although higher than that of the United States, does not represent exponential growth.

The unemployment rate in September 2022 stood at 8.7%, which Bolsonaro described as “the largest drop in unemployment compared to 40 other countries.”

“Poverty has never been higher in Brazil than in 2021, since the beginning of the historical series in 2012, making a lost decade,” said Marcelo Neri, director of FGV Social.

In the last decade Brazil ranked seventh among the largest economies in the world (between 2010 and 2014), while in the last 5 years it dropped to number 12.

With AP, and local media.

Brazil’s economy: what are the financial challenges for the next president?