Government proposals for the economy renew confidence in Brazil

The proposal for pension reform prepared by the Brazilian government is already creating positive consequences for the Brazilian economy. One of the main points of the new administration's economic agenda, the proposal joins other measures that will be announced by President Jair Bolsonaro in the near future.

Anticipation for the reforms has already created positive results in the short term, including in indexes such as the São Paulo Stock Exchange (B3) Ibovespa and the real-dollar exchange rate. On Thursday (January 31), the index hit an unprecented 98,000 points during trade, ending the day at 97.9 thousand points.

In the assessment of Silvio Campos, an economist at Tendências Consultoria, the signs show confidence in the direction the government has been giving to the economy, which makes Brazil more attractive and reliable to both foreign capital and national investors.

"This is a sign of the expectations, now held for some time, of an economic agenda poised in the right direction, a reformist, liberalizing one, which improves the environment for investors," he explains. "This has helped build confidence," he added.

Investments and jobs

Optimism with short-term changes has already led to increased foreign and domestic investments. This signals that job and income generation are now in the country's horizon. Externalities, such as the signaling by the US Federal Reserve that interest rates will not continue to rise, have also contributed to the optimism in the country's financial market.

Pedro Rudge, founding partner at investment fund Leblon Equities, believes that the lingering optimism is linked to the continuity of the reform agenda. "The trend is that, as the economy grows, reforms will be implemented, confidence will grow and unemployment will decline," he says. "It will be very important to confirm that the reforms will be approved," he says.

Other indicators, such as the unemployment rate and business confidence, show that optimism about the business environment in Brazil is also widespread internally.

In the last quarter, the unemployment rate closed at 11.6%, lower than in previous years, while the Business Confidence Index reached 98 points, a five-year high, according to a survey by the Getulio Vargas Foundation (FGV).