Anuário da Indústria de Implementos Rodoviários 2021

56 ARTIGO | ARTICLE | ARTÍCULO B razil is going through a very pessimistic period, caused by a combination of crises in early 2021. But care must be taken not to underestimate the ability of the economic and political scenarios to rebound quickly. In addition to mistrust of the government’s environmental agenda, there are doubts about its capacity in health management and uncertainty over its commitment to economic responsibility. The replacement of the Petrobras CEO was a catalyst for such doubt, suggesting a high level of risk. This domestic situation has been rocked by volatility in global interest and exchange markets, inflation in Brazil and worldwide, and the unexpected turn in elections, reflecting an environment of legal uncertainty in Brazil. As much of this doubt is expected to linger over the coming months, it is natural that a pessimistic approach will prevail, and investors and businesspeople will be more cautious. This may, however, overlook specific changes underway. The first factor for growth in 2021 is non- economic, namely progress in vaccination and the reopening of the economy, with mobility favoring recovery in the service sector. The other reasons are economic. Given the solid fiscal and monetary stimulus in the world, a new phase of expansion has begun. In the United States, the combination of efficiency, low production costs, and atypically strong stimulus should drive significant recovery after the 2020 shock and start a new growth cycle. China, likewise, is expected to grow significantly. The recovery in the USA and China, in turn, will drive better European performance. The result should be the continued rise in commodity prices, benefiting exporting countries. This external influence will favor Brazil, whose economy is historically dependent on commodity prices. The currency has been devalued by about 50% in real terms compared with the average of the last 30 years. With high international prices, record agricultural production, and a favorable exchange rate for exports, the trade balance is expected to remain in surplus, contributing to a way out of recession. In addition to trade, capital and investment inflows are likely to add to global liquidity. From a local point of view, there are also relevant factors. Even as the interest rate is being normalized, levels are still low by historical standards and benefit credit-sensitive sectors. With high exports and low interest rates, labor and credit markets should react. Employment is recovering, and businesses are confident about hiring. Similarly, the recovery of the economy reduces the risk for new operations and allows credit to back the business cycle. In the political environment, economic recovery and progress in vaccination should prevent further crises. In the same vein, the financial markets, unemployment, the economic team, the audit court, and a competitive election will prevent populist economic decisions and the abandonment of reform in Congress. The strategy used between 2006 and 2014 to control public tariffs, raise spending, and interfere with the Central Bank’s decisions showed the high economic, social and political costs. Even more so now, with public debt and unemployment already very high. The worst that could happen to Congress and the Executive right now is a combination of unemployment and rising inflation, repeating the scenario in 2015. Vaccination, global growth, and responsible economic management are, therefore, what will prevent a deepening recession in Brazil. It may not be perfect, but excessive pessimism that leads to bad decisions must be avoided. Caution and pessimism By Roberto Padovani Chief economist of Banco Votorantim Although the short-term outlook for Brazil is negative, the good news should not be ignored.