CNI says economy could grow 2.1% this year

The confederation, however, warns that the improvement is due only to agribusiness, with other sectors of the economy shrinking or slowing down. He adds that it is necessary to reform the tax system and reduce interest rates to unlock the Brazilian economy.

According to CNI estimates, while agriculture should grow 13.8% this year – driven by record food production – industry should expand only 0.6%. The performance of the industrial sector also has inequalities: the construction industry will grow by 1.5%, but the manufacturing industry – affected by high interest rates – is expected to shrink by 0.9% in 2023.

lack of competitiveness

In a note, the CNI points out that the national industry suffers from the lack of competitiveness generated by the complexity of the tax system and the scarcity of credit caused by high interest rates. Despite this, the entity considers that the advance of the tax reform in the National Congress and the fall in inflation, with the probable reduction of the Selic Rate (basic interest rate of the economy) this semester, improve the perspectives for the Brazilian economy.

In addition to approving the tax reform and lower interest rates, the CNI asks the government to speed up the creation of an industrial policy that will allow the country to enter global production chains “in an innovative and sustainable way”.

Inflation and consumption

Regarding inflation, the CNI projects that the Extended National Consumer Price Index (IPCA) – used as an official indicator by the government – will end the year at 4.9%, against a previous estimate of 6%. According to the entity, the slowdown helps to rebuild the average real income of families and to recover purchasing power and consumption.

For the CNI, the labor market recovery continues, with the expectation of the average unemployment rate for 2023 falling from 9% to 8.3%. The forecast for real income growth (above inflation) rose slightly, from 6.7% to 6.8% this year.

The estimate of household consumption will rise 1.8% in 2023, against a previous forecast of 1.2%. The CNI attributes the increase to the partial recovery of credit as of March and to the increase in the value of Bolsa Família, which stimulates purchases in markets and pharmacies.

interest and dollar

With regard to interest rates, the confederation estimates that the Selic rate will end 2023 at 11.75% per year, likely to drop two percentage points from the current 13.75%. Regarding the exchange rate, the organization predicts that the commercial dollar will reach R$ 4.90 at the end of the year, against the previous forecast of R$ 5.35.

The trade balance surplus forecast (exports minus imports) for this year jumped from US$ 55.7 billion to US$ 62.4 billion. For public accounts, the entity maintained the primary deficit projection (negative result without public debt interest) of 1.1% of Gross Domestic Product (GDP).