2023 begins with a decisive and welcomed defense of democratic institutions by all relevant private and public agents in Brazil. Recent polls show overwhelming accord with the legitimacy of the government, despite a highly polarized polity. However, to maintain and consolidate political support, the new administration must deliver on its promise of sustaining growth, and this will be hard to deliver. The economy is at the tail end of a cyclical recovery, the product in part of repeated changes in the fiscal framework in a failed attempt by the outgoing administration to win reelection. To keep commitments agreed in 2022 for 2023, the new administration sought and obtained congressional support for an additional 2-2.5% of GDP in spending, yet again over and above the constitutionally mandated expenditure ceiling. The fiscal stimulus of 2022 was financed by unexpected revenues, 80% coming from the commodity boom. This is no longer true for 2023 and, moreover, by all estimates, the preexisting economic output gap has closed. Though delivering modest growth, at about 3% in 2022, the economy was operating beyond its full potential. Given developments abroad, the exhaustion of the post-COVID cycle, and the contractionary stance of the Central Bank of Brazil to fend off the demand-based policies of 2022, growth is expected to decelerate sharply. Meanwhile, the administration faces the challenge of fiscal consolidation in an attempt to keep public expenditure and debt in a non-explosive trend.

All of this means a fertile brew for the insights of the superbly competent and articulate group of political analysts, economists, and market strategists the Chamber gathered to examine Brazil’s economic and political outlook over the coming months. Please watch the highlight video for the 2023 installment of this timely and informative program.

Moderators:

Paulo Vieira da Cunha, Partner, Verbank Consulting, LLC

Drausio Giacomelli, Head of EM Research, Deutsche Bank Securities

Speakers:

Cassiana Fernandez, Brazil Chief Economist, J.P. Morgan (virtual participation)

Christopher Garman, Managing Director for the Americas, Eurasia Group (virtual participation)

Fabio Kanczuk, Financial Analyst, ASA Investments (virtual participation)

Lisa Schineller, Managing Director, S&P Global Ratings

Check out our highlights

To watch this event details check out on our YouTube profile.