On 23 May 2022, President Bolsonaro resigned the president of Petrobras, José Mauro Coelho, who had been in office for only 40 days. He is the third president of the state-owned company to be dismissed during the Bolsonaro government. The resignations come at a time of escalation in gasoline and diesel prices, one of the main causes of high inflation, which Bolsonaro tries at all costs to avoid. This is yet another attempt to try to control Petrobras’ pricing policy, which by statute must follow strict criteria of international parity in oil prices. The replacement of Coelho with Caio Paes de Andrade (name linked to the Minister of Economy, Paulo Guedes) could only be the first step towards an alteration of the Board of Directors and later of the management of Petrobras, with the placement of more “docile men ” and ready to follow the indications of the government.
The TCU (Tribunal das Contas da Uniao) has approved the privatization of Eletrobras, a state-owned company for the generation and transmission of electricity, the first major privatization project of the Bolsonaro government. With this operation, the state will reduce its shareholding from 60 to 45%. Privatization will take place through the issue of new shares, which will “dilute” share control. The operation will have a scope of approximately 67 billion reais, of which 25.3 will go directly to the state coffers. The price of the new shares will be defined in the next few days and their offer should take place by the end of June 2022.
According to the most recent polls for the October 2022 presidential election, Lula has widened her lead over Bolsonaro: 47% voting intentions versus 29%. Ciro Gomes follows in third position, with 7%. Joao Doria, pre-candidate of the PSDB, in recent weeks has given up the presidential race.
Brazilian GDP growth forecasts improve in 2022. The government has raised its estimate to + 1.5% and in Banco Central it is even more optimistic and signals a possible growth close to + 2%.
The unemployment rate fell, which in the quarter February-April 2022 fell to 10.5%. The number of employees in the service sector is growing, but in general the whole economy is showing signs of consistent recovery.
Here is the trend of the main indicators:
GDP (Value added at market prices)
|GDP – real growth (%)||-3,3%||1,3%||1,8%||1,4%||-4,1%||4,5%||1,2%|
For the second consecutive month, the 2022 GDP growth forecast rises, estimated today at + 1.20%. Positive signals come above all from the services sector, thanks to the post Covid reopening.
Inflation and real/dollar exchange
|IPCA (IBGE – %)||6,29%||2,95%||3,69%||4,20%||4,38%||10,0%||8,89%|
The inflation estimate at the end of the year is always on the rise, mainly due to the international situation, which pushes up the prices of raw materials. Although price growth slowed down in May – as expected – the international situation puts commodity prices under pressure. With the expected gradual reopening of the Chinese economy, these tensions should intensify, however favoring Brazilian exports.
The forecast for 2022 is growing strongly compared to a month ago, at + 8.89%.
|Exchange rate R$/US$ (end of the period)||3,25||3,25||3,75||4,01||5,19||5,57||5,05|
The dollar is quoted today (June 7, 2022) at R$ 4.80, a slight decrease compared to a month ago. Therefore, the appreciation of the Brazilian currency continues compared to the all-time highs of early 2021, when the dollar was quoted at R$ 5.69.
The boom in commodity prices should favor the entry of new foreign currencies, consolidating the appreciation of the real; however, the unknowns linked to the presidential elections remain, with the two favorite candidates (Bolsonaro and Lula) who are already fielding a vast repertoire of populist economic proposals.
By the end of 2022, the estimate of the dollar price went from R$ 5.00 to R$ 5.05.
The euro is quoted today at R$ 5.13, down from a month ago and still far below the price at the beginning of the year (R$ 6.42).
|Nominal Interest rate (end of the períod)||13,75%||7,00%||6,50%||4,50%||2,00%||9,25%||13,25%|
|Real interest (deflactor: IPCA)||6,91%||4,05%||2,81%||0,3%||-2,4%||-0,75%||4,36%|
The SELIC discount rate is now 12.75% per annum.
The year-end forecast of the economists consulted by the Central bank remains unchanged compared to a month ago (13.25% per annum).
A new increase of 0.5% is expected at the next meeting of the Monetary Policy Committee, a stabilization at least until the end of 2022 and then starting a gradual decrease in 2023 (Selic forecast for the end of 2023: 9.75%).
The Brazilian stock market (Bovespa)
Ibovespa closed the session on 6 June 2022 at 110,186, +1.7% compared to the close of early May (108,343 points on 4 May 2022). Growth in the period was +3.9% in dollars and +3.1% in euros.
In May, the performance of the Brazilian stock exchange was therefore clearly better than that of the Nasdaq (-6.5%) and the Dow Jones (-3.4%).
Commodities and banks led the market this month; On the other hand, large-scale distribution and service companies are still penalized.
After an April characterized by strong gains, during which foreign investors pocketed part of the profits accumulated in the first three months of the year, capital returned to flow towards the Brazilian stock exchange.
The economic situation favors Brazilian companies, but the unknown factor of inflation in the US and of the next moves by the Federal Reserve remains.