Economy Minister: “Concept that Brazil will not grow next year is political, fake news”

RIO DE JANEIRO, BRAZIL – “This idea that Brazil will not grow [next year] is political, it’s blah blah blah, it’s fake news,” Guedes told retail entrepreneurs.

“If we get scared, saying that Brazil is going to sink, like the doom and gloom crowd that says that the GDP is going to plummet 10% and it only drops 4%, that the economy is going to sink, then it has V recovery, it’s not going to grow this year and it grows 5.5%. Were we to believe them, Brazil would have already stopped.”

Guedes did not directly say who the “doom and gloom crowd” is. Over the past few weeks, downward revisions to the Brazilian GDP in 2022 and even 2023 have begun to be released by banks and financial market consultants.

According to the Central Bank’s (BC) Focus Report, released yesterday, the median of market projections for Brazilian economic growth in 2022 fell again for the 4th consecutive week. In the last retraction, it dropped from 1.63% to 1.57%.

In addition, the Brazilian economy shrank 0.1% in the second quarter, according to the Brazilian Institute of Geography and Statistics (IBGE) data released in early September, which prompted economists to start revising the performance in 2022 along with higher inflation data.

According to Guedes, the Brazilian economy was accelerating rapidly, but experienced a string of shocks. “Suddenly it’s that same story of the 7 plagues of Egypt. It seems to be happening. Two, 3 months into the government, we had the biggest environmental disaster in Brazil, in Brumadinho. The GDP fell and we pushed the GDP back to growth,” the Minister said.

“Then, the crisis in Argentina explodes and 40% of São Paulo’s automotive production is exported to Argentina. It sinks again and we push it back up,” he continued. “Then, when it takes off again, Covid hits,” he continued. “And now the greatest water crisis in 92 years. It’s hard, but it will not beat us.”

In his speech, the Minister of Economy urged Congress to pass the Court-ordered debt PEC (constitutional amendment) and the income tax reform in order to make room for the increase in the “Bolsa Família” (Family Grant) or “Auxílio Brasil” (Brazil Aid), the name given by President Jair Bolsonaro’s government to rebrand the program.

According to Guedes, the approval of both would remove the uncertainty that has worried the financial market and brought down the Ibovespa, the main index of the Brazilian stock market.