Tuesday, January 31, 2017

Brazil closes in 2016 with fiscal deficit and unemployment records – State of Minas

Brazil has closed 2016 with a deficit in the primary of 2.47% of its Gross Domestic Product (GDP), compared to 1,88% in 2015, the worst result since it began the current measurement 15 years ago, according to the Central Bank.

unemployment also reached a record level in 2016, and will continue to grow until the mid of this year, expecting that the reduction of interest rates and other measures, pro-market reverse the trend of recession of the country.

The result of the consolidated public sector by 2016, before the payment of debt interest, was 155,791 billion reais, reflects the deep crisis in the brazilian economy.

however, the balance was below the target set by the government, on the red 163,942 billion reais, thanks to the contribution of extraordinary an operation of money laundering abroad.

In December, the deficit in the primary was 70,737 billion reais, almost twice that of November (39,141 billion).

The deterioration of the last month of the year was caused by the expenses of the central government – the Treasury, Central Bank and Social security -, which registered a deficit of R$ 64,248 billion.

The regional governments and the company state had accumulated a deficit of R$ 6,067 billion and R$ 422 million, respectively.

The Finance ministry projected for this year a deficit of 139 billion reais only in the central government, below the R$ 154,255 billion in 2016.

The improvement of the consolidated result of the past year in relation to the expectations of the government complied in good part to collect additional 24 billion reais of the program of repatriation of assets not declared on the outside, the second explained the minister of Finance, Henrique Meirelles.

The gross debt of Brazil accounted for 69,5% of the Gross Domestic Product by the end of 2016, slightly below the record of November (70,5%), but 4 points above the December 2015 (65,5%).

The main Latin american economy shrank by 3.8% in 2015 and, according to the estimates, would have decreased 3.5% in 2016, which would result in its first period of recession since the 1930s.

in 2017, the Central Bank projected a modest growth of 0.8%, while market players expect a minor expansion, of 0.5%.

The unemployment rate, in turn, rose to 12% in the last quarter of 2016, compared with 11.9% in the previous quarter, a record level since the beginning of the current way of calculation, in 2012.

analysts polled by the agency Gradual Investments wagered, on average, in a maintenance of the rate at 11.9%.

In the fourth quarter of 2015, the unemployment was 9%. Its gets worse, 3%, occurred in the context of the second consecutive year of economic recession in the country.

At the end of 2014, stood at 6.5%, virtually doubling these two years.

In the period October-December of 2016 there were a total of 12.3 million people in search of employment in Brazil, 36% higher (3.3 million people) than in the same period of 2015, said the Brazilian Institute of Geography and Statistics (IBGE).

The government of Michel Temer has launched a series of austerity measures with the intention of recover the trust of investors to revive the economy, but the takeoff if announces slow.

The Central Bank cut the high interest rates adopted to combat inflation, but they inhibit investment and consumption.

interest rates fell from 14,25% in October to 13% in January and the market is expected to fall to 10.9% this year, following the reduction of 10,67% in 2015, and a 6.29% in 2016, closing in 2017 in to 4.70%, according to the market projections.

“But these measures still don’t have effect and the employment is the last variable that experience an improvement,” said Alex Agostini, chief economist at the consulting firm Austin Rating.

This is explained, to the fact that measures tend primarily to improve the productivity, and, consequently, the employed people should work longer before companies can contract.

so, the expert predicted that the unemployment rate will reach 13% in may, before you begin to drop, to close the year at around 12.5 percent.

An improvement of confidence indicators in industry and services have surprised the government this month, but according to Agostini, still it remains to be seen “whether this pleasant surprise is consistent or momentary”.


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