The first half of 2024 has come to an end, and we are now officially in the second half of the year. It is natural that some plans have come to fruition, while others may not have turned out as expected. But, when it comes to Brazil's economic situation, what can we expect for the next six months?
According to data released by the International Monetary Fund (IMF), the new projections position Brazil as the 8th largest economy in the world in 2024. This advance results from a forecast of 2.2% growth in Gross Domestic Product (GDP), reflecting a stable rate of expansion. Such growth is driven by the commerce, services, and agriculture sectors, as well as increased investments and household consumption, facilitated by the reduction of the Selic rate and the decline in the unemployment rate.
However, despite the recent drops in the Selic rate, the current level of basic interest rates in the country is still a barrier for those considering taking risks, entrepreneurship, or starting a business activity. After all, just leaving the money idle yields inflation (IPCA) plus 6.4% per year. Entrepreneurial activity truly needs to have a very attractive profitability for the investor to decide to take the risk. It is urgent that interest rates continue to fall in a healthy manner, without forcing them down.
And for interest rates to continue falling, all economic agents must have confidence in the monetary authority, and inflation expectations must be, in the jargon of experts, "anchored." This means that they should converge to a certain oscillation band, without major surprises, which calms the nerves and fosters the creation of an environment where more people are confident to invest here in the long term, since their investments will not be eroded by inflation.
We must pay close attention to the current economic situation and consider how we will be affected as citizens. Many economic issues may seem irrelevant to our daily lives, but upon closer analysis, we realize their inevitable impacts. An example of this is the trade balance, which this year shows more imports and fewer exports compared to the previous year.
Another fact that highlights this concern is the prices of food, which had decreased in 2023 but are expected to be affected again by inflation. This happens due to adverse weather events across the country and the world, especially with the tragedy of the rains that affected Rio Grande do Sul. The Focus Bulletin highlights an increase in the price of these products at a rate higher than the overall inflation, which is expected to end the year around 3.96%.
Furthermore, we also have the issue involving the increase in the dollar, which directly affects our internal inflation indices and is again reflected in people's daily lives. With the increase in the dollar, we may feel impacts on the prices of imported products, companies' production costs, and inflation expectations. And those planning to travel abroad or participate in exchange programs outside the country face another challenge, which is the devaluation of the real.
In summary, there are many variables to consider. Therefore, if you do not have a well-structured financial plan tailored to your reality, it is much more likely that you will get lost in this vastness of news and events, which become mere noise over longer time frames. Therefore, plan your strategy (or review what you already have), considering the need to invest, always looking at the long term.
What to expect economically from the second half of 2024?
