CNI says economy should grow 1.2% in 2022
The National Confederation of Industry (CNI) projects a 1.2% growth for the Brazilian economy in 2022, based on the “partial overcoming of cyclical problems, such as inflation, employment and normalization of global value chains from the second half of the year onwards. ”. The forecast is in the document Brazilian Economy: 2021-2022, released today (15th), in Brasília.
For the entity, economic activity should also benefit from the normalization of demand for services provided to families, which is still below the pre-pandemic level, as well as some industrial sectors still in demand in 2021, especially those linked to investments, such as civil construction and capital goods chain.
In a more pessimistic scenario, the forecast is for an expansion of the Gross Domestic Product (GDP, sum of goods and services produced in the country) by 0.3% in 2022. In the optimistic scenario, Brazil will grow by 1.8%.
For 2021, the CNI calculated an increase of 4.7% in economic activity. "The estimate is lower than expected at the beginning of the year, due to the constant declines in the industry that took place in the second half," he explained, in a statement.
According to the confederation, this year's GDP expansion reverses the 4.1% drop in 2020, but the result does not mean that the problems accentuated by the crisis and the country's structural challenges have been overcome. "There is a loss of pace in economic activity and prospects for next year are not very encouraging", he explained.
Among the unfavorable conjunctural factors, the CNI highlights high inflation, with consequent rises in interest rates, high household indebtedness, unemployment, scarcity of inputs and raw materials and rising energy costs. In addition, for the entity, there are still uncertainties about the progress of the pandemic and the fear of some setback, as is currently occurring in Europe.
Transformation industry
The CNI estimated growth of 5.2% for the manufacturing industry in 2021. During this year, the GDP of this sector assumed a trajectory due to the scarcity and high prices of inputs and raw materials. For next year, the expectation is for a gradual increase in employment which, with the deceleration of inflation and the Brazilian Aid, should minimize the process of loss of purchasing power by families.
In addition, from the second half of 2022, the forecast is for regularization in the supply chains. For CNI, the devaluation of the real will also be beneficial to the Brazilian industry, with incentives for exports and the substitution of imports in the domestic market. The entity estimated that the exchange rate will end 2022 at R$ 5.60, the same level as at the end of 2021. In a base scenario, the manufacturing industry should grow 0.5% in 2022.
The CNI's forecast is for a positive trade balance in 2021, of US$ 58.9 billion, an increase of 16.9% compared to 2020. According to it, exports are mainly driven by prices, especially of commodities, while imports show generalized growth in volume.
Estimates for exports and imports are, respectively, US$ 278.4 billion (a 33.1% increase compared to 2021) and US$ 219.5 billion (a 38.2% increase).
“For 2022, the normalization of the supply of inputs and raw materials and the real exchange rate, which is still quite undervalued, will give impetus to Brazilian exports and encourage a process of import substitution. CNI projects exports to reach US$ 280 billion next year, a level slightly higher than in 2021", informed the confederation.
Inflation and employment
In the CNI's assessment, the continuation of the increase in the basic interest rate , the still high unemployment, the federal government's primary expenditure in real decline, moderate economic activity and stability in fuel prices should cause inflation to slow down. For 2022, the institution expects an inflation of 5%, close to the ceiling of the inflation target. The target defined by the National Monetary Council (CMN) is 3.5%, with a tolerance margin of 1.5 percentage points up or down.
"This scenario considers that there should be no further changes in fiscal rules, which could raise inflation, through the depreciation of the real," explained the National Confederation of Industry.
This year, she estimates that the Extended National Consumer Price Index (IPCA), which measures the country's official inflation, should decelerate moderately in December and close 2021 at 10.3%. In November, the IPCA was 0.95%, below that observed in October 2021, 1.25%. Inflation accumulated in the year is 9.26% and 10.74% in 12 months.
real income mass
For CNI, the number of employed people will continue to grow and the mass of real income should start to recover from the second half of next year, in response to the drop in inflation. “For 2022, it is expected that the recovery of consumption and employment will continue in services provided to families, such as transport, accommodation and food, associated with the increase in the circulation of people”, projected the entity.
The expectation is that, in the second half of 2022, when the recovery of services is close to the pre-pandemic level, industrial activity will be more heated.
“However, there is a relevant population contingent that should rejoin the workforce in the coming quarters. Thus, even with the continued growth of the employed population, the return of these people to the labor market will keep the unemployment rate pressed upward throughout 2022", explained the confederation, projecting that the average unemployment rate should be slightly lower than the 2021, remaining at 13%.
The document Brazilian Economy: 2021-2022 is available on the CNI website .
* With information from CNI
Text translated using artificial intelligence.
