When people worry too much about the economy, it’s because it’s doing poorly. When everything is going well, it’s natural for a topic to fall off the radar — as shown in the Genial/Quaest poll released Wednesday. In ranking Brazilians’ concerns, the economy was mentioned by 15% of interviewees, a far cry from the 38% received by security, which tops the list. This result reflects positive surprises in several indicators, such as the September Monthly Services Survey (PMS), released today by IBGE, which recorded growth of 0.6%, higher than the market expected. This was the eighth positive result in a row, accumulating a 3.3% increase in the year. The volume of services is 19.95% higher than the pre-pandemic level in February 2020 – the best result in the historical series.
This sector is considered essential: services represent about 70% of GDP, and the services management system covers half of this sector, which is large and fragmented. Noteworthy is the 1.2% growth in the transportation sector, which is an indication of the expansion of other activities as well. This performance brings encouraging data through the end of the third quarter and is already causing upward revisions in economic growth forecasts, as we highlight here on the blog.
Inflation also surprised positively. The October IPCA, released on Tuesday, changed just 0.009%, below market expectations. Food items at home fell by 0.16%, marking the fifth consecutive decline. Cheap foods lighten the budget, especially for low-income families, making room for other types of consumption. In March, inflation expectations at the end of this year were 5.68%, and analysts now expect the inflation rate to be slightly below the target ceiling of 4.5%.
In addition to the scenario of low inflation and a hot labor market, with unemployment reaching a historic low, there is a financial market that is witnessing a strong recovery. Yesterday, Ibovespa broke its 12th consecutive record, reaching 157,748 points. In the year, the index registered an increase of 30.4%. The dollar closed on Tuesday at its lowest level in 17 months, at 5.27 Brazilian reals. Since the beginning of the year until now, the riyal has risen by 16.63% against the US currency. On December 30, 2024, one dollar was equal to 6.17 Brazilian reals.
There are many external factors that contribute to the exchange rate – such as the possibility of the end of the crisis close In the United States – but there are also internal reasons why Brazilian indicators have improved on different fronts of the economy. It is very good that the economy grows, with low inflation, low unemployment, and ceases to be the primary concern of the country.
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