Industry shows optimism at the end of the first half of 2023

The Industrial Entrepreneur Confidence Index (ICEI) shows that 17 out of 29 industry sectors are confident. According to the survey, there was a transition from distrust to confidence in June. The result breaks a three-month sequence of lack of confidence in the industry that took place between March and May 2023, according to a survey released by the National Confederation of Industry (CNI).

For economist and professor of public policy Jackson De Toni, there are currently several elements in the economic, political and social situation that favor the advancement of industrial confidence. Among other points, he points out that Brazil has recently been upgraded to investment grade by international risk rating agencies — which, according to him, signals to investors that the country is a safe place to invest.

“Interest rates are declining, they are still absurdly high, but forecasts for the next meetings are declining. Inflation is under control, there is already deflation, negative inflation, prices are falling in some wholesale sectors. The approved fiscal framework will undoubtedly bring more stability in expectations. The tax reform itself, which is being discussed in Congress and perhaps an unprecedented approval in recent years, will bring a significant improvement”, he says.

According to the ICEI, confidence increased in small, medium and large industrial companies. The biggest advance was registered in the medium companies, of 2.2 points. The ICEI for small companies increased from 47.6 points in May to 49.3 points in June. Despite the rise, the index still points to a lack of business confidence. CNI’s economic analysis manager, Marcelo Azevedo, claims that the scenario is optimistic.

“This recovery is the result of an improvement both in the assessment of current conditions and expectations for the next six months in most sectors, in all company sizes and in all regions”, he explains.

Federal deputy Alceu Moreira (MDB-RS), member of the Parliamentary Front for Competitive Brazil, says that the increase in industry confidence is the result of advances in the economic agenda in the National Congress. The parliamentarian says that these changes can bring the necessary predictability for the industry to make medium and long-term investments.

“(Predictability) It comes with the tax reform, it comes with the fiscal framework, it comes with a set of legislation that establishes something more definitive for the sector in the future, including from a competitive point of view. The industry is not competitive today because of the tax issue. Improving the tax condition makes the industry competitive and, of course, improves employability and income capacity”, he argues.

Expectation

There was also progress in all components of the ICEI. The survey shows that the Current Conditions Index advanced 1.1 points to 44.2 points. Despite the rise, the index remains below the 50-point dividing line that separates pessimism from optimism. The Expectations Index rose 1.3 points to 53.5 points, which indicates industry optimism for the second half of 2023.