2nd Seminar on Conjunctural Analysis discusses importance of second quarter for economy
Economic activity continues to struggle. The 0.2% decrease in the GDP in the first quarter, compared to the last quarter of 2018, ignited a red light, although a poor performance was already expected in the first three months of the year. Domestic issues, such as the delay in approving the Social Security reform, as well as other reforms necessary to boost the economy, together with an unfavorable external scenario, with the global economy growing less, increase the degree of uncertainty and have a negative impact on economic activity . Why have we grown so little? To answer this question, Fundação Getulio Vargas’ Brazilian Institute of Economics (IBRE) brings together experts on June 17, from 4 p.m. to 6 p.m., for the 2nd Seminar on the 2019 Conjuncture Analysis. The event will be held at the FGV Cultural Center (Praia de Botafogo, 186, Botafogo, Rio de Janeiro, RJ).
The meeting will feature the participation of researchers from FGV IBRE: Armando Castelar (coordinator of the Applied Economy), Silvia Matos (IBRE Macro Bulletin coordinator), Samuel Pessôa (associate researcher), and José Júlio Senna (Head of the Center for Monetary Studies), as well as political scientist Carlos Pereira (professor at FGV EBAPE).
Silvia believes that this is the time to discuss new challenges for the economy. According to the researcher, the first quarter was affected by internal clashes and the impact of the international scenario.
“When we talk about growth, we consider the interannual and the month-by-month comparison. In the interannual comparison, the first quarter was indeed very weak. Part of this decrease can be explained by the clashes. We had some highlights in the first quarter: the clash of the extractive industry and the effect of Argentina on reducing Brazil’s exports, greatly affecting the manufacturing industry,” said the economist.
The Social Security reform and others that are also important, such as the tax reform, are still on the agenda. According to Silvia, reforms such as the one relating to Social Security are most difficult in the early administration. If it is approved with a narrow voting margin, it may signal to investors that it will be difficult to vote for others. According to the researcher, the performance of the economy in the second quarter will be the most relevant indicator of how it can close the GDP in 2019 and in next year.
“We had a very important factor at the beginning of the year, which was a major change regarding the outlook for the future. The perception of agents has changed, as identified by our confidence indicators, starting in March, mainly. There was a feeling that the economy has derailed, and that everything is lost in relation to 2019. Our vision is that it is still possible to grow, but in any case, this change of perception is already causing problems, which is already a very bad sign. We will have a very different behavior in investments compared to last year. Irrespective of growth, even if it is confirmed this year, the composition will be poor. The investment probably will not offset the losses. Investments need predictability.”
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