Newsletter 41st Congress Day 1


End of fiscal deficit and sustained economic growth

Economy Minister Paulo Guedes designed an encouraging scenario for the Brazilian economy for the next coming months. “We were at a time of great uncertainty about the future, but today the fundamentals of the Brazilian economy are improving substantially. In 2021, Brazil will have economic growth of 5.3% of the GDP (Gross Domestic Product) and a substantial drop in the primary deficit to 1.7%”.

In his presentation, the Brazilian Minister of Economy recalled that the IMF predicted a 9.7% drop for the Brazilian GDP this year, while for the more advanced economies, it indicated a reduction of around 4%. “But the opposite was the case”, said Guedes. According to him, the United Kingdom dropped 9.7%, Italy 8.7%, France 7.6%, Germany 5.6%, Japan 4.5%, and Brazil dropped 4.1%. “The Brazilian economy dropped less and rose faster”, he commented.

The minister also stressed that the economy dropped strongly into a V, created more than one million jobs in the last four months of last year and another 1.5 million in the first six months this year.

For Guedes, the fiscal aspect of Brazil is under control. “The deficit has practically ended”, he said. The primary deficit, which represents the negative result in the government accounts without considering the interest on the public debt, may drop from 10.5% to 1.7% this year, and it may close at 0.3% next year. He cited the “structural reforms” being made by the government, including the independence of the Brazilian Central Bank, the creation of “fiscal triggers” to control public spending, and the modernization of the natural gas sector, with a new regulatory framework to reduce the price of energy. “It is the only economy in the world that is carrying out structural reforms while fighting the pandemic”.

In his speech, the minister highlighted the importance of a solid and secure Intellectual Property system and defended the voluntary licensing of patents in opposition to the so-called patent breaking. “A good and effective IP protection system ensures return on investment and creates an innovation ecosystem by remunerating investors, attracting corporate capital, and resulting in increased investment in research and development and more competitive companies. For example, 80% of the market value of SAP 500, the main stock exchange in the United States, is made up of intangible assets”.

According to the minister, the three main challenges of the Brazilian Intellectual Property system are the improvement of Intellectual Property registrations, the dissemination of the IP culture, and the training of innovative companies to identify the intangible assets in their businesses. He mentioned the 210 actions of the ENPI (National Intellectual Property Strategy), launched by the government, which aims to increase the participation of intellectual property intensive businesses in the Brazilian GDP from the current 20% to 30% in the next ten years.

In a pacifying tone, the minister touched on the subject of politics. “In times of elections, we have to moderate the excesses, on both sides, to guarantee the Brazilian economic recovery, which is practically guaranteed. I reaffirm my trust in the institutions, in the presidency of the republic, in the STF (Federal Supreme Court), in the Senate, and the Chamber, so that occasional excesses by some players do not become a distortion of the institutions”.