Fiscal and external uncertainties can make entrepreneurs more cautious

Uncertainties regarding the Brazilian economy decreased in September, according to the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre/FGV). The continuity of this movement, however, is threatened by the unsatisfactory dynamics of the international scenario and fiscal uncertainties, says Anna Carolina Gouveia, an economist at the institution.

According to Ibre, two aspects are of concern on the international scene. One of them is the difficulty in knowing whether the United States has already ended the cycle of increasing interest rates. The other concerns China’s growth problems, which could affect exports, mainly of oil and iron ore, two of the main products on the Brazilian agenda.

Another factor that could add uncertainty in relation to the world economy are the consequences of the war in the Middle East, triggered by the attack by the terrorist group Hamas on Israel. Analysts interviewed by People’s Gazette point out that the main concern is with the price of oil, which could favor a new resumption of global inflation.

In Brazil, one of the concerns is the deterioration of the fiscal situation. The public sector went from a primary surplus of 1.27% of Gross Domestic Product (GDP) at the end of 2022 to a deficit of 0.7% in August 2023, the most recent data.

During this period, public debt increased from 72.6% to 74.4% of GDP. Furthermore, a survey carried out in September by Genial Investimentos shows that 95% of those interviewed in the financial market do not believe that the federal government will be able to eliminate the deficit next year.

This scenario could contribute to companies, consumers and the financial market becoming more cautious in relation to the Brazilian economy. Business confidence, according to Ibre, is in a moderately low range for the fourth consecutive month.