RIO DE JANEIRO, BRAZIL – Optimistic by nature, Brazilians are less confident about the future this time around. This is reflected in the expectation of economic recovery. According to an exclusive survey by market research firm Ipsos, 76% of Brazilians believe that the country will only economically overcome the effects of the pandemic in two or more years.
For 37%, the recovery in Brazil will occur between two and three years from now, while 39% of the population are even more pessimistic and believe that the recovery will occur in three years. As many as 28% points to a period of one year in the future, while only 3% believe that the end of the crisis has already arrived.
The data is part of a global survey conducted by Ipsos, which polled 21,503 people from 29 countries between June 25 and July 9. In the survey, most respondents believe that the end of the pandemic’s impact should be reached in two to three years – and the outlook in Brazil is no different. What stands out is the low level of optimism among Brazilians.
“Culturally, in this kind of global comparison, the Brazilian population is usually always among the most optimistic about the future,” says Marcos Calliari, president of Ipsos Brazil. “The fact that it is at the global average shows that Brazilians think the crisis is far from over.”
The explanation for Brazilians’ lower optimism lies in the discrepancy between the improvement of some short-term macroeconomic indicators and the deterioration of others that directly affect the population’s wallet.
On the one hand, the vaccination against Covid-19 is progressing in the country, and the Brazilian economy is expected to grow by about 5% this year; on the other hand, some indicators undermine the confidence of the population: accelerated inflation and high unemployment.
The Focus Bulletin, which reflects the average of analysts’ and economists’ expectations, has recorded the acceleration of inflation week after week. In the latest edition, published Monday, August 16, the average IPCA inflaction increase forecast for 2021 was 7.05%. Four weeks earlier, the estimate was 6.31%.
Further increases are expected. André Perfeito, chief economist at Necton Investimentos, on Thursday (19) revised his expectation for the IPCA for 2021: from 6.9% to 7.5%. “The persistence of high energy prices (electricity, gasoline, and gas) may cause a diffuse increase in costs, in addition to the actual increase. We see greater inflation persistence over the relevant time horizon.”
The unemployment rate stands at 14.6%, representing a contingent of nearly 15 million people looking for work. This level has remained stable since last June. According to IBGE, however, which compiles official unemployment statistics, the employment rate is 48.9%. This means that less than half of the working-age population is employed in the labor market.
The persistence of these economic indicators has undermined consumer confidence. In Ipsos’ global confidence index, Brazil is among the countries least likely to regain pre-pandemic levels. In July, Brazilians’ confidence index is 42.7, down 7.6 points from January 2020 (although it is up 2.4% from June).
Unfortunately, there is no reason for Brazilians to improve perceptions in the short term. “The combination of political and economic crisis, high unemployment, and interest rates to contain inflation will slow consumption and investment growth in 2022,” wrote Sergio Vale, chief economist of JMB Associados, when publishing the revised GDP increase forecast for next year from 1.8% to 1.4%.
The Ipsos survey also asked what signs indicate that the growth revival will last. For 76% of people, opening new businesses in the city where they live is the most important indicator of perceived improvement. As many as 75% of respondents say that rehiring people they know is necessary to feel that improvement is real.
“The perception of improvement must be visible. When relatives and friends are out of work, the business in the neighborhood where they live closes, and the supermarket bill gets more expensive; it’s hard to see an end to the crisis,” Calliari says.