Optimism About Brazilian Economy Highest Since 2014

07/18/2016 - 11h25

Expectations among Brazilians about the future of the country's economy in relation to their personal situation spiked during the last few months and reached the highest levels since December 2014.

According to a new Datafolha study carried out on July 14th and 15th, Brazilians feel more confident about reduced inflation, the lowered risk of becoming unemployed and increased purchasing power.

When compared to February, before the beginning of Dilma Rousseff's (PT) impeachment proceedings and the establishment of President Michel Temer's (PMDB) interim administration, the Datafolha Confidence Index (IDC) registered improvements in five of the seven indicators that make up the general index.

In this set, the IDC registered 98 points, an 11 point high compared to February. This is the best mark since the end of 2014, when it reached 121 points.

This was the third consecutive study where the index showed improvements.

The greatest spike, with 34 points between February and present day, was seen under the expectation for the improvement of the country's economic situation, which went from 78 to 112 points.

When compared to the personal perspective of those interviewed, there was a 17 point increase, going from 128 to 145.

According to the Datafolha methodology, indexes above 100 are considered positive and those that fall below this number are considered negative.

RECESSION

The Brazilians' improved outlook on the economy in general as it relates to their personal situation coincides with the expectation of financial market, commerce, and industry agents that the worse of the recession might be behind them.

In the last few weeks, drops were registered in the value of the dollar against the real and the Bovespa index valorization, the main thermometer for the stock market in the country.

The study shows that the indicators most tied to a Brazilian's day to day life (employment, purchasing power and inflation) remain in the negative field (under 100 points).
But all of the indicators saw improvement compared to the study conducted in February of this year.

Inflation reached an 18 point high (for 40). Unemployment gained 17 points (for 50). In terms of the purchasing power among those surveyed, there was a 10 point variation, resulting in 54.

After reaching 10.67% last year, the market predicts a price variation no greater than 7% in 2016, which would result in improved consumer purchasing power.

However, with the exception of the good news about inflation and the fall of the dollar, the Temer administration has yet to make profound changes to justify the Brazilian optimism revealed by the study.

The large macroeconomic problems in the background, such as the unsustainable increase in public debt triggered by rising fiscal deficits, in addition to the pension shortfall, still depend on the approval of unpopular measures in Congress in order to be addressed.

While the study reveals some optimism about the job market, the unemployment rate reached 11.2% during the trimester that ended in May and it will most likely continue to rise during the next few months before it falls.

BRAZIL AT A LOW

While economic indicators improve and reach the highest marks since December 2014, the Datafolha Confidence index shows that among those surveyed, attitudes towards Brazil as a place to live and the sense of pride about being Brazilian were the only indicators that fell.

While they remain above the index's general average (98 points), the two indicators fell below the lowest recorded marks in the index's history: 145 and 138, respectively.

The study also revealed that 32% of Brazilians spontaneously cite corruption as the country's main problem.

The other factors cited included health (17%), unemployment (16%; highest index since March of 2009), violence and lack of safety (6%) and education (6%).

In December 2014, after Rousseff's reelection, only 9% cited corruption as the main problem.

Translated by SUGHEY RAMIREZ

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