The entity states that the idea is to create a consensus around fiscal goals and economic policies to “neutralize market nervousness and stabilize the exchange rate”
The president of (National Confederation of Industry), Ricardo Alban, proposed this Monday (6.Jan.2025) a “national pact” between the Three Powers, businesspeople and workers to boost economic growth and avoid a recession.
According to the CNI, the idea is to create a consensus around fiscal targets and structuring economic policies, ensuring that, while seeking to balance public accounts, there are also selective stimuli that ensure the continuity of investments.
“The convergence between the Palácio do Planalto, the National Congress and the Judiciary, added to the participation of state and municipal governments, would constitute a fundamental step towards mitigating risks, as it would involve clear rules of fiscal responsibility associated with incentives for strategic sectors, such as industry and agribusiness”Alban said in a statement. Here is the note (PDF – 252 kB).
The entity warns that, despite the Brazilian economy having started the year 2024 with positive indices, market distrust regarding the government’s fiscal policy and external factors helped to worsen some aspects in the 2nd semester, such as the devaluation of the real and the increase in the Selic – basic interest rate.
“The debate on the direction of fiscal and monetary policy has intensified precisely because, despite the spending cutting measures proposed by the Executive having been approved by the Legislature, the magnitude of the containment (close to R$70 billion in 2 years) does not eliminate alone, the need for a more comprehensive pact”he wrote.
Alban states that if the measures are implemented at the beginning of this year, it will be possible “neutralize market nervousness, stabilize the exchange rate at a level compatible with external competitiveness” and prevent the maintenance of high interest rates from making public debt even more “onerous”.
“The degree of success in this endeavor depends, to a large extent, on effective coordination: all levels of government, the productive sector and the workforce need to come together in a consensual effort to dispel negative expectations and give the country a new cycle of inclusive and lasting expansion”stated the president of the CNI.
DOLLAR AND SELIC
The commercial dollar closed 2024 at R$6.18, up 0.22% in the last trading session of the year, on December 30. It rose 27.3% in 2024. The real was the 6th currency that has depreciated the most in relation to the dollar in the year, according to a survey by Austin Rating’s chief economist, Alex Agostini.
The year 2024 was the first in which the dollar closed above R$6.00. It surpassed the mark for the first time on November 29th. Reached the annual peak and nominal record of the historical series in R$ .
The basic rate, the Selic, a level that has not been reached since 2006. The base interest is at 12.25% per year, but the indicated that it will rise by another 2 percentage points. According to the Focus Bulletin, financial agents expect an increase of at least 15% in July.
The Copom (Monetary Policy Committee) signaled that it will raise the base interest rate in the next two meetings. Selic ended 2024 at 12.25% per year. The board indicated that it will increase by 1 percentage point in January and another 1 percentage point in March.
