Sluggish economy and high unemployment: experts debate third quarter and outlook for year
The public pension reform looks set to be approved by the Senate. This is good news for the public finances, but economic indicators haven’t responded yet. Although economic growth picked up in the second quarter, it is likely to end 2019 around 1%, like in the two previous years. Likewise, the decline in unemployment to 11.8% is welcome, but it happened due to the creation of jobs in the informal economy, which are lower quality and pay less. What can we expect for the rest of this year? What else can be done to unlock growth and rekindle investment? To answer these questions, the FGV´s Brazilian Institute of Economics (FGV IBRE) and newspaper O Estado de S. Paulo are bringing together experts at the 2019 Outlook Seminar – 3rd Quarter. The meeting will take place in the FGV 9 de Julho Auditorium at Avenida 9 de Julho, 2029, Bela Vista, Sao Paulo, on September 11, from 9 am to 12:30 pm.
“There were some advances in the first eight months of this year. The public pension reform is about to be approved, with greater fiscal savings than anticipated – close to R$1 trillion in 10 years, compared with expectations of roughly R$400 to R$700 billion. Interest rates continue to fall, reducing the cost of loans for companies, and at the last meeting of the Monetary Policy Committee, the Central Bank signaled further cuts in September,” says Armando Castelar, the coordinator of the Applied Economics area at FGV IBRE.
According to him, one area of concern is the global economic slowdown, which could hinder a strong recovery of the Brazilian economy. Another reason why the domestic economy is still weak is the low level of investment.
“The world continues to slow down. However, as domestic reforms move forward, to what extent will we manage to offset less favorable external conditions to slightly accelerate our growth, which remains stubbornly low? The external world is a source of uncertainty and it is holding back investment, which dropped 30% and has since recovered very little. And that’s exactly what is missing in our post-recession recovery. Some economists argue that the answer lies in more tax incentives or higher government spending, while others, like me, think this would be counterproductive. But everyone agrees that investment can return if we manage to reduce uncertainty,” Castelar says.
The meeting’s speakers will be FGV IBRE economists Silvia Matos, Bráulio Borges, Livio Ribeiro, Armando Castelar and Samuel Pessôa, as well as Fernando Limongi, a professor at the FGV´s Sao Paulo School of Economics.
For more information and to sign up, visit our website.