What is happening in Brazil?
1. Politics – The Federal Police exempted President Jair Bolsonaro from the crime of malfeasance in the purchase of the Covaxin vaccines. The Attorney General, Augusto Aras, recommended the maintenance of the investigation against Bolsonaro in the case of the leaking of data on an investigation that was under judicial secrecy. The previous week, Bolsonaro did not give a statement to the Federal Police about this case, as had been determined by Justice Alexandre de Moraes.
Bolsonaro did not attend the opening ceremony to initiate the 2022 year of the Federal Supreme Court (STF) on Tuesday (1). The president of the STF, Luiz Fux, made a statement in which he asked for respect for democracy. At the opening of the year of the Superior Electoral Court (TSE), Minister Luis Roberto Barroso was more assertive: accused President Jair Bolsonaro of supporting digital militias and hackers and reinforced, indirectly, the idea of blocking Telegram in Brazil.
On Wednesday (2), Bolsonaro attended the opening of the Legislative Year in the National Congress. The president of the National Congress and the Federal Senate, Rodrigo Pacheco, spoke, emphasising the more than 628,000 deaths resulting from Covid-19 and highlighted the legislative output. The president of the lower house also spoke defending the approval of essential reforms. Finally, Bolsonaro delivered the Presidential Message to the National Congress, and spoke about the government’s actions and highlighted the priorities in the relationship with the Legislative. (Senate Agency)
A PowerData survey shows that the distance between Bolsonaro and Lula has shortened in the second round. Earlier, Lula would beat Bolsonaro by 54% to 32%. In the most recent poll, Lula would still win, but by 54% to 37%. For the first round, Lula was down 1 pp and Bolsonaro was up 2 pp.
The results converge with the findings in the Quaest poll, presented in January 2022:
The assessment of President Jair Bolsonaro, meanwhile, remains stable, with 53% of respondents considering his government as bad and terrible and 27% as great/good (+2pp to the previous survey).
2. Economy – The government received information that the 38 members of the Council of the Organization for Economic Cooperation and Development (OECD) unanimously decided to invite Brazil to begin the formal process of joining the organization. Brazil has already adhered to 103 of the 251 normative instruments. (Brazil)
As widely expected by the market, Copom raised the Selic rate by 1.5 percentage points to 10.75% p.a. The minutes of the meeting, in which the rationale behind the decision will be known, will be released on Tuesday (8) and will provide clarity as to the next decisions. (Valor)
Industrial production advanced 2.9% in December, exceeding market expectations (+1.6%). The result was driven by the automotive sector (+12.2%).
Brazil’s consolidated public sector recorded the first primary surplus in 2021 since 2013, with a positive balance of R$64.7 billion, equivalent to 0.75% of Gross Domestic Product (GDP), exceeding market expectations. The data were released by the Central Bank. According to the Central Bank, regional governments were mainly responsible for the surplus, with a positive balance of R$ 97.7 billion in 2021. State companies also had a surplus, of R$2.9 billion, while the Central Government had a deficit of R$35.9 billion. (CNN)
The unemployment rate in Brazil stood at 11.6% in the quarter ended November, down from 13.1% in the previous quarter. Compared to the same quarter in 2020 (14.4%), the drop was even greater. The rate recorded in November is the lowest since January 2020 (11.2%), but the lack of work still affects 12.4 million Brazilians. The data are from the Pnad Contínua (National Continuous Household Sample Survey), released today by IBGE (Brazilian Institute of Geography and Statistics). (UOL)
Data released in January show that Brazil has recovered one position and climbed to seventh place among the countries that will attract the most Foreign Direct Investment (FDI) in 2021 globally, according to estimates by the United Nations Agency for Trade and Development (UNCTAD). The FDI flow to the Brazilian economy grew more than 100% last year to US$ 58 billion, compared to US$ 28 billion in 2020. (Valor)
Exports in January grew 25.3% and reached US$ 19.67 billion, the best result for the month in the historical series which began in 1997. Imports reached US$ 19.85 billion, up 24.6%, the highest since January 2014 (US$ 20.2 billion). The trade balance registered a deficit of US$ 176 million. (Brazil)
3. Public administration – Adolfo Sachsida was appointed as head of the Special Advisory Office for Strategic Affairs of the Ministry of Economy on Wednesday (2/2). He was formerly secretary of Economic Policy at the ministry.
How to read it?
1. With the resumption of legislative work, the trend remains positive. This means that there is no significant systematic opposition to the government’s projects, but neither is there a majority that allows the government to approve all its priority agenda. Nevertheless, the government is expected to continue to enjoy solid parliamentary support and not face institutional conflicts with the National Congress. That might not be the case with the Judiciary.
Popular support for the government remains stable, with no major changes. The electoral polls, that give Lula an advantage, might bother the Planalto and its closest advisors.
2. The first analysis of the year also shows the economy with a positive outlook. Again, this does not mean that the economy is exceptional, but that, given all the problems resulting from the pandemic, the government’s decisions are contributing positively to economic growth.
One of the main points was related to the reduction of public debt in relation to GDP. The market expected that 2021 would end very badly, and that is not what happened. Also, the most pessimistic perspectives pointed to a greater exchange devaluation, lack of fiscal control and decreasing investments. What we have seen with the numbers is a slightly better scenario than the one predicted by most analysts: increase in productive investment, positive exchange flow for investments and growth in exports. Is it all enough for the economy to grow? And Covid-19, has it cooled down or not? These are difficult questions. What can be stated is that the Ômicron variant did not cause the problems in the magnitude it could have, and this may have a positive impact on the global economic recovery, including in Brazil.
3. Public management is in a neutral trend. The government starts the year with a relatively cohesive team, without major novelties.