The improvement in the labor market and the increase in demand from the service sector made the National Confederation of Industry (CNI) raise the projection of economic growth this year. According to the 2nd Quarter Report, released today (8) by the entity, the estimate went from 0.9% in April to 1.4% in July.
At the end of last year, CNI had forecast growth of 1.2%. However, the war in Ukraine and the lockdowns in China led the institution to reduce the forecast to 0.9% three months ago. The forecasts were based on the performance of the economy in the first quarter. However, the executive manager of Economics at CNI, Mário Sérgio Telles, says that the data for the second quarter, available so far, allow us to expect the continuity of the performance.
According to the CNI, the recovery of the labor market continues, with formal employment on the rise since 2020, with 97.5 million people employed. Despite high inflation, real average income is also growing. These data made the entity reduce, from 12.9% to 10.8%, the expectation of the average unemployment rate in 2022. The forecast of real wage bill growth (above inflation) rose from 1.4% to 1, 6% this year.
sectors
In relation to the sectors of the economy, the CNI also revised upwards the projections of the Gross Domestic Product (GDP) of some segments. For services, the growth forecast increased from 1.2% to 1.8%, driven by post-pandemic normalization.
In relation to industry, the estimate went from a drop of 0.2% to a high of 0.2% in 2022. According to the entity, the industrial sector recorded moderate increases in production in the first quarter, with greater dynamism in industries linked to the processing of commodities (primary goods with international quotation).
The negative highlight was agriculture, whose projection changed from expansion of 1.3% to stability (0%). According to the CNI, the downward revision is due to adverse weather events that affected the soybean crop at the beginning of the year.
Inflation and interest
The estimate for official inflation by the Broad National Consumer Price Index (IPCA) went from 6.3% to 7.6% in 2022. The new projection considers the cheaper prices resulting from the reduction of the Tax on the Circulation of Goods and Services (ICMS) on fuel, electricity, telecommunications and public transport.
Regarding the economy’s basic interest rates, the CNI believes that the monetary tightening promoted by the Central Bank has not yet come to an end. The institution believes that the Selic rate, currently at 13.25% per year, will rise by 0.5 percentage point at the next meeting of the Monetary Policy Committee (Copom) and will end 2022 at 13.75% per year.
transient factors
According to the executive manager of Economics at CNI, some transitory factors helped to heat up the economy in the first quarter. He mentions the advance of the thirteenth for Social Security retirees and pensioners, the release of withdrawals of R$ 1 thousand from the Severance Indemnity Fund, the resumption of payment of the salary bonus (suspended last year) and the increase in direct income transfers, caused mainly by the benefit of R$ 400 from Auxílio Brasil.
