Brazil has been increasingly moving away from the United States of America in terms of the economy, especially since Jair Bolsonaro is president and Donald Trump is no longer president in the USA. And the new ally is China. And it is in China that Brazil must continue to bet, whether with Jair Bolsonaro at the helm of this Brazilian ‘ship’ or with Lula da Silva
The elections in this Portuguese-speaking country, located in South America, are scheduled for next October. The polls point to a change of direction, specifically for the return of Lula da Silva to the highest office in Brazil. However, according to statistics, experts, etc., what cannot change, at least in the short and medium term, is the bet that this country has made in its relationship with China, concretely, for a year now.
If at the time of the election of Jair Bolsonaro in 2018, the batteries of the Brazilian economy pointed towards the United States, with Donald Trump in the presidency, now they are on the opposite side of the world, in China, mainly due to the economic crisis that is expected to occur. the coming years, due to the Covid-19 pandemic and all the political instability in the world, with the War in Ukraine and the tension between the United States and China over the Taiwan issue.
“In 2008, it was China that managed to lift the economic world. We are living, and the whole world has lived, a very serious crisis and it was China that managed to get the economic world to achieve some balance. And it managed to do so by putting a lot of stimuli on the market, at a time when in the United States of America and in Western Europe there were no stimuli, but there were many fears and setbacks”, says economist Eduardo Pereira Nunes to PLATAFORMA.
It is true that China’s growth prospects for this year are not encouraging. In fact, the Asian country’s GDP frustrated expectations, growing by only 0.4 percent in the second quarter and increasing the risk of a global recession. And this could also leverage Brazil for a similar scenario, as a result of the dependence of Brazilians on China, even being the country that works most commercially with this Asian nation.
“If in 2008 China showed strength in the face of a crisis, now it will be no different. It is true that when China does not grow, neither does Brazil. But when [China] grows, and it will grow again, Brazil will follow suit. The latest figures are not encouraging, of course, but if we look at what Xi Jinping’s government has done in recent crises, we have to believe that the same thing will happen.
There are some credit chains that are already beginning to move, with injections of millions in the market and the issuance of new debt securities. It is still uncertain to say what will happen in 2023, but China will always have to be the great ally”, predicts the economic expert. It is true, however, that the numbers coming from China are not encouraging, nor can anyone dream of much more in terms of growth.
“Yes, evidently. The important thing here is to understand how the lack of growth in China may affect the Brazilian economy, which is dependent on China, as little as possible. It is work that I believe is being done. China’s impact will not only be in Brazil, but throughout the world. And for the world to grow accordingly, certainly such injections into the market cannot be made only by the Xi Jinping Government, but by the big market players.
I think that the 2008 crisis taught large economies a lot”, concludes Eduardo Pereira Nunes. Meanwhile, the International Monetary Fund (IMF) improved its growth estimate for the Brazilian economy in 2022, despite the difficulties faced by global economies.
In its Global Economic Outlook report, the IMF went on to see Brazil’s Gross Domestic Product growth this year at 1.7 percent, well above the 0.8 percent rate calculated in April. These figures are also slightly above, for example, those of the Organization for Economic Co-operation and Development (OECD), which at the beginning of June pointed to growth of only 0.6 percent.
However, in the same IMF report, and looking ahead to the year 2023, the data are less encouraging, showing an expansion of activity of 1.1 percent.
Will slower growth in China be a reality?
With GDP growth at just 0.4 percent and despite prospects for improvement for the rest of the year, the Chinese government’s growth targets of 5.5 percent (the lowest in three decades) look increasingly unfeasible. .
The World Bank, for example, had already revised downwards, to 4.3 percent, even with a strong stimulus from the Central Government in the second half of the year to reverse the impacts of confinement due to the Covid-19 pandemic. For its part, Goldman Sachs, which had one of the highest estimates, cut its growth forecast for China in 2022 from 4 percent to 3.3 percent. Even so, despite these perspectives, the Chinese government responded to these data with assertiveness.
Or at least confidence that the scenario can be changed.
“We will make great efforts to consolidate the foundations of economic recovery, strive to stabilize the economy and keep economic operation within a reasonable range, prioritize achieving the objective of stabilizing employment and prices,” the Chinese finance ministry said. in a statement.
For his part, the prime minister of China, Li Keqiang, also predicted hope for a recovery, although he put some cautions, especially due to the global scenario, where China, for example, has still been very restricted in terms of the pandemic of Covid-19 concerns, with its zero case policy.
“Right now, the economy is recovering, but the foundations are unstable. Much work is needed to stabilize the economy. That’s the work we’re doing. But the rest of the world also has to work in the same direction. It is a crisis on a global level or if we don’t want to call it a crisis, we will have to call it less sustained growth, compared to the last few years,” he said.
