Brazilian economy is stronger than most, says minister, and unemployment will fall to 8% by end of year

The unemployment rate, currently at 9.3%, could fall to 8% by the end of the year with the economic recovery, said yesterday (9) Economy Minister Paulo Guedes. He attended the opening of the Congress of the Brazilian Association of Bars and Restaurants (Abrasel) in Brasilia this evening.

“We will bring [the unemployment rate] down to 8% before the year ends. We will end the year with the lowest unemployment rate in the last 10, 15 years,” the minister said.

According to Guedes’ assessment, Brazil is in a long investment cycle. According to him, the Brazilian economy is in a better position than those of developed countries that are entering recession and those of other Latin American countries that are “falling apart,” according to the minister.

According to the Brazilian Institute of Geography and Statistics (IBGE), the unemployment rate in the quarter ending in June reached its lowest level in seven years. Guedes attributed the labor market recovery partly to an improvement in the business environment and a reduction in red tape.

“Brazil is in a long growth cycle. We have created a business environment that already has contracts worth R$890 (US$174) billion. It is ten times what a minister invests,” he stressed.

DEBT RENEGOTIATION

Without giving details, Guedes said that the economic team intends to expand the tax transaction programs (renegotiating debt with the government). According to him, trade, services, and the events sector should have the same opportunities to settle debts that other industries affected by the Covid-19 pandemic have had in recent years. Guedes said that the Ministry of Economy has already drafted a model for fiscal transactions.

The minister reiterated his recent statements that Brazil, unlike other countries, has weathered the pandemic without an explosion in public debt. “Brazil is standing on its own two feet. It has two major wars behind it,” he explained.

In 2019, the government’s gross debt stood at 74.3% of gross domestic product (GDP). With the recovery of the economy and the increase in tax revenues, it has decreased and currently stands at 78.2% of GDP. The additional spending related to the pandemic reached 88.8% in 2020. Foreign debt stands at a mere 11%, and unduly coercion from the IMF and the likes can be entirely excluded.

TRADE OPENNESS

Guedes pointed out that Brazil agrees with the plan to join the Organization for Economic Cooperation and Development (OECD) and said that European companies expressed interest in investing in Brazil after the war between Russia and Ukraine. “Today, there is this perception, and with the Ukraine war, the plug is out,” he commented.

Guedes said he had spoken with a French minister (without naming him) to ask Europe to open its market to Brazilian products. “Our trade with you [Europe] was US$2 billion at the beginning of the century. With China, it was also US$2 billion. Today, we trade with you to the tune of US$7 billion. And we trade with China to 120 billion U.S. dollars,” Guedes told the French government official.

“You are becoming less and less important to us. You better treat us well because if you don’t, we will tell you ‘f.. you’ and go the other way. After all, you will become irrelevant,” he added.

With information from Agencia Brasil