New regulatory frameworks and incentives for private investment are bridging pillars for the future; read article
2022 has been a particularly challenging year for the Brazilian economy. The reduction in the number of cases and deaths from pandemic has put an end to the restrictive measures on urban mobility, but has opened the bottlenecks in the production system, which, together with the increase in demand due to monetary and fiscal stimulus policies, have generated strong pressure inflationary. Against this backdrop, the war in Eastern Europe has intensified inflationary pressures and forced central banks to adopt highly restrictive monetary policies.
Despite this difficult scenario, the performance of the Brazilian economy in 2022 surprised on the upside, with a more favorable trajectory for the inflation rate (5.9%), growth in Gross Domestic Product (GDP) above the projections at the beginning of the year (3.3%) and above interest rates unemployment close to 8.0% of the workforce, the lowest since 2014. In addition to the strong recovery in the service sectorafter the pandemic, a tax policy relatively conservative, generating a primary surplus and reducing the ratio of debt to GDP and, in particular, the structural reforms implemented in the last seven years in the country have been fundamental for this performance.
Four reforms were particularly important: the labor reform and the liberalization of outsourcing, the end of Long Term Interest Rate (TJLP)the autonomy of Central bank and the Social security reform.
The labor reform has reduced the number of appeals to the labor court, strengthened collective bargaining, released outsourcing, among other points. The result was a sharp increase in employment and formalization of the workforce (100 million employed) and a decrease in the unemployment rate.
The demise of the TJLP gave birth to a long-term credit market and allowed for the development of the capital market. The autonomy of the Central Bank has reduced uncertainties about monetary policy and the rate of inflation, and the Law on State Companies has ensured better governance of public companies and, together with the lower growth in social security spending, has generated a collection” that contributed to debt-to-GDP reduction.
The new regulatory frameworks increased incentives for private investment (toilets, railways, among others) and the investment rate rose from 14.3% to 19.6% of GDP between 2017 and 2011. These are some of the pillars of the bridge that will lead us to a promising future if the country persists in building it. Happy 2023.
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Source: Terra
Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.
