February 17th, 2023


1. Central Bank predicts 2.9% GDP increase in 2022

On Thursday (16), the Brazilian Central Bank (BC) published its Economic Activity Index (IBC-Br). In it, BC predicted a 2.9% growth in production of goods and services – as measured by the Gross Domestic Product – in 2022.

This is a 2.08% drop compared to what was expected in 2021. The decrease is due to the interest rate hikes instituted to contain inflation.

A Central Bank poll of more than 100 financial institutions shows that the market expects a 3% increase in the Brazilian GDP in 2022. The definitive results will be revealed on March 2nd.

G1: ‘Prévia do PIB’ do Banco Central tem alta de 2,9% em 2022 e indica desaceleração da economia 
Banco Central: BC divulga o IBC-Br de dezembro de 2022 

2. Tax reform: Chamber of deputies announces committee

On Wednesday (15), Chamber of Deputies President Arthur Lira officially announced the creation of a committee to discuss the tax reform.

The group will consist of 12 Members of Congress who will discuss Constitutional Amendment Proposal 45, which has been under analysis by the Chamber since 2019. Congress expects members of the committee to assess the proposal and submit it to voting in the first half of 2023.

Some business entities, as well as state and municipal governments, are against the reform for fear of losing tax money, an issue which could delay the voting.

Folha de S. Paulo: Lira cria grupo para reforma tributária na Câmara e debates devem começar após Carnaval 
Câmara dos Deputados: Grupo terá o prazo de 90 dias para concluir os trabalhos, podendo ser prorrogado

3. Government will increase the minimum wage and fix income tax calculations

On Thursday (16), President Luiz Inácio Lula da Silva announced that the federal government will increase the minimum wage to R$ 1,320 per month as of May. Lula said every year will see an increase according to inflation rates and GDP growth.

The President also announced that income tax calculations will be corrected. People with an income of up to R$ 2,640 per month (two times the minimum wage) will be exempt from paying income tax. Currently, the exemption only covers people who make R$ 1,903.98 per month or less. This rate of exemption will slowly increase until it benefits people making up to R$ 5,000 per month – a presidential campaign promise.

CNN: À CNN, Lula anuncia salário mínimo de R$ 1.320 e isenção de IR a R$ 2.640 
Folha de S. Paulo: Lula anuncia salário mínimo de R$ 1.320 e isenção do Imposto de Renda de R$ 2.640

4. Consumption Intention Index highest since beginning of the pandemic

The Household Consumption Intention Index (ICF) increased 1.3% in February in comparison to January. According to the National Confederation of Trade in Goods, Services and Tourism (CNC), It is the highest the index has been since the beginning of the pandemic. When considering the annual fluctuation of ICF, there was a 23.3% increase.

The growth is mostly thanks to families of lower income – of up to 10 times the minimum wage – whose consumption intention grew 1.1% in February.

Confederação Nacional do Comércio: Intenção de consumo das famílias com menor renda retoma nível pré-pandemia 

5. New Brazilian fiscal policy will be announced by the government in March

Finance Minister Fernando Haddad said the administration will announce the new Brazilian fiscal policy in March. The new rule on public spending will replace the current “Spending Ceiling”, which was created in 2016 and limited an increase in public spending to the same rate as inflation of the previous year.

According to Haddad, the main reason why the fiscal policy will change is that the spending celling slowly lost its credibility due to continuous constitutional alterations that made it possible to breach it, a practice known as “breaking the ceiling”.

The idea of the new policy is to offer a viable solution, with more credibility. 

Folha de S. Paulo: Anúncio de nova regra fiscal será antecipado para março, diz Haddad 
CNN: Fazenda deve apresentar em março nova regra fiscal, afirma Haddad