The Week Ahead in Brazil #83

What is happening in Brazil?

1. Politics – The lower house concluded the approval of the constitutional amendment proposal on Tuesday (9). The PEC was approved by 323 votes for and 172 against. The project follows for consideration by the Senate and may go through the Commission of Constitution and Justice (CCJ).

President Jair Bolsonaro (no party) is in Dubai, where he participates in the Invest in Brazil event, accompanied by ministers and businessmen. The presidents of the lower house and Senate are in Lisbon, participating in the 9th Lisbon Legal Forum, at the University of Lisbon Law School. (Estadão and Poder360)

The president of the PL, Valdemar da Costa Neto, issued a note to the press stating that Bolsonaro’s affiliation to the party, scheduled for November 22, was postponed indefinitely. Bolsonaro stated that there was still a lot of talking to do. (Folha)

Genial/Quaest poll shows that the negative assessment of the government rose from 53% in October to 56% in November. The positive assessment retreated from 20% to 19% in the same period.

2. Economy – Banco do Brasil’s net profit was R$5.14bn in the third quarter of 2021. The result was 47.6% higher than the same period last year. The accumulated profit in the first nine months of 2021 was R$15.1 billion, with a growth of 48% compared to 2020, and the bank’s highest result after the first three quarters. (Valor)

The IPCA in October registered an increase of 1.25%, reaching an increase of 10.67% in the last twelve months. (Estadão)

The services sector, in line with the industry’s and retail’s, registered a drop in activity in the month of September. Even so, the sector accumulated a yearly high of 11.4%. (Estadão)

President Jair Bolsonaro announced the extension, for two more years, of the payroll tax exemption for the 17 sectors of the economy that employ the most people. The benefit would end this year. (Estadão)

The Economist has published a strong piece against the government’s economic policy.

3. Public administration – According to the World Intellectual Property Indicators Report (WIPI), Brazil is the country that takes the longest to grant patents in the world. In 2020, the average time to grant a patent in Brazil was 62.3 months; in the United Kingdom, 36 months; in the USA, 20 months; and in Iceland, the fastest country in granting patents, the duration was only 4 months. Despite the delay, there was a growth of 84.4% in patent concessions in 2020 compared to the previous year. The granting of patents, in Brazil, is carried out by the National Institute of Intellectual Property, the INPI, a federal autarchy linked to the Ministry of Economy. (Valor)

On Monday (9), thirty-four employees of the Ministry of Education resigned. They were responsible for managing the National High School Exam (Enem) at the National Institute of Research and Studies (INEP). The reason alleged by the servers was “technical and administrative weakness of the current management of INEP”. (Estadão)

How to read it

1. The trend in politics remains positive. There were no significant changes in the metrics: Bolsonaro has managed to stay away from unnecessary controversies, the coalition in Congress remains slightly positive and popular support remains low but stable.

The main issues of the week to follow are the repercussions of the postponement of Bolsonaro’s PL membership, which may cause some noise in the presidential coalition, and how economic issues will advance in the Senate.

2. The trend for the economy has retreated to neutral. Despite the advance of fiscal fundamentals and the conduct of monetary policy, the October inflation news came worse than expected. The expectation that inflation would begin to decline as of October, as I and other analysts had assessed, did not materialize. The level of economic activity in September was not good either, which could contribute to a delay in the decline of inflation.

3. Public management has also retreated to neutrality. The requests for collective resignations are a bad sign for the leadership and show that the Ministry of Education faces management problems that need to be addressed quickly.

The INPI’s slowness in granting patents is a clear indication that Brazil still misses development opportunities for itself. It is alarming that the institution is not modernizing itself to reduce the time it takes to grant patents, an undeniable source of wealth generation.

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