Newsletter Edition 35 - April 2022


A breeze amid the economic downturn

The Brazilian economy is starting to come out of inertia, and the country is already being seen with goodwill by foreign investors, said this Tuesday, April 26th, economist Zeina Latif, in an in-person and virtual event promoted by ABPI’s Corporate Committee. “We have agendas that are moving forward, and what we need is to recover the entrepreneurial spirit of the industry”, she said. “Brazil is in a privileged position, and within the short term it will benefit, as there is a breeze, a slightly different look from investors abroad”, added the economist in her presentation “Trends and economic perspectives in Brazil”, with the participation of ABPI’s president Gabriel Leonardos, the Committee coordinator, Patrícia Gestic, and representatives of companies, including Vale, Braskem, Sanofi, Bosch, and Interfarma, among others.

But, despite some positive signs, the economic recovery scenario is still a long way off, pondered the economist, and Brazil will still have to live with rising inflation and a fall or stagnation of economic activity. “The interest rate hike will still materialize in the economy, with the possibility of negative variations in the GDP,” she said. “We’re not going to have an easy environment this year.” She explained that Brazil did not solve structural problems within the scope of the so-called Brazil Cost, such as excessive state interventionism, protectionism, tax distortion, lack of specialization of the workforce, and low productivity of the industry. “We need to eliminate special protectionist regimes that contribute nothing to the country”, she defended. “The industry made many mistakes in its agendas, very attached to protectionism, but we have to turn this page because it did not work.”

The president of ABPI recalled that, in the last eight years, patent applications with the BPTO (Brazilian Patent and Trademark Office) dropped from 36 thousand to 26 thousand applications, which, according to him, “demonstrates Brazilian technological gap and is a consequence of the deindustrialization of the country”. For Zeina, however, deindustrialization should not justify more protectionist policies. “We are almost stagnant in terms of productivity”, she stated.

With an average GDP per capita growth of 0.7% per year in the last decade, according to the economist Brazil has been performing below that recorded among Latin American countries and far below emerging and advanced economies. The country’s very unstable economic cycle, which makes planning and investment policies difficult, may result, according to her, in additional conjunctural difficulties. Inflation, “more widespread and stubborn”, will persist for some time, along with the rise in interest rates, which will happen because of cost pressure and especially fiscal expansion. “A country that already spends badly would have to be more careful in calibrating resources and the way it spends. We missed the mark as if there was no tomorrow. Today, we have higher inflation and interest rates than the rest of the world.”

Elected by Forbes magazine among the most influential economists in Brazil, Zeina Latif is director of Gibraltar Consultoria and served as chief economist at XP Investimentos.

The morning continued with a roundtable attended by Gustavo Monteiro, a Stellantis’ attorney, and Claudia Oliveira, IP Leader at Vale.