January 3, 2020


1. People approve of Moro but are critical of the Federal Supreme Court and Bolsonaro

The popularity of Minister of Justice Sergio Moro – who made it on the Financial Times 50 People of the Decade list – overshadows the popularity of both the President and the Federal Supreme Court. According to a Datafolha poll, the former judge is seen as good or great by 53% of people interviewed. His work is considered average by 23% of Brazilians and 21% think it has been bad or awful. Jair Bolsonaro, on the other hand, had a less impressive rating with only 30% of people assessing his administration as good or great, 32% as average and 36% as bad or awful. Comparing Moro’s popularity with the popularity of an institution that has been in the public eye – like the Federal Supreme Court – the minister again has the advantage: 39% of people do not approve of the work of the Supreme Court. According to 38% of people, the work of the Court is average and only 19% of Brazilians think it is good or great. When questioned about possible electoral results at the end of his term in 2022, President Jair Bolsonaro said Moro is “loved in Brazil and has great potential.” Before Christmas, Bolsonaro had said Sergio Moro would be an amazing vice-president. Learn more about the expectations for the 2022 elections at Brasília Report.

Folha de S.Paulo: STF e Bolsonaro são menos populares do que Moro
Folha de S.Paulo: Moro é o ministro mais bem avaliado do governo

2. Increase in the number of industry jobs is the largest since 2015

During the third quarter of 2019, the number of employees in the manufacturing industry grew to 10.7 million, showing that the sector is recovering. The number of people employed in the industry is 1.3% more than what was registered in 2018 and the largest since 2015 when 11.5 million people were working in the sector. The increase in the number of jobs is mostly due to the food and textile industries, as well as the maintenance and installation of equipment, which created 189,000 formal job opportunities. Analysts also see the return of investments – although still low – as one of the main reasons for the increase in hires. The intermittent contracts of employment – which allows for non-continuous work – introduced by the Labor Reform has heated up the job market. According to consulting company IDados, which is responsible for data in the sector, there were around 900,000 new job vacancies in 2019, slightly lower than the 948,300 announced by the federal government due to layoffs in December. The unemployment rate was around 11.2% in 2019 and is expected to drop to 10.7% in 2020.

O Estado de S. Paulo: Taxa de emprego na indústria é a maior desde 2015

3. Stock exchange ends 2019 with the best result since 2016

The Brazilian stock exchange ended 2019 with a 31.58% increase, the highest results in the past three years. According to analysts, the performance was due to a higher number of small investors joining the stock market. Ibovespa reached a never before seen 117,000 points in December but closed at 115,000 points in the last two trading sessions. Last year was the fourth consecutive year of positive results in the Stock Exchange. In 2015 it dropped 13.31% but recovered and increased to 38.94% in 2016, 26.86% in 2017 and 15.03% in 2018. Out of the 68 stocks that are part of Ibovespa only six ended 2019 with an overall drop. According to specialists, the drop in the basic interest rate to a record low of 4.5%, the economic growth and the Pension Reform have left investors more optimistic. Yesterday, during the first day of trading sessions of 2020, the Stock Exchange reached a new high with 118,500 points, a 2.53% increase.

Valor Econômico: Ibovespa de 2019 com rentabilidade de 31,58%
O Estado de S.Paulo: Bolsa bate novo recorde no 1º dia de operações
Folha de S.Paulo: Brasileiros garantem alta da Bolsa

4. Brazil falls in Latin American economic growth ranking

Brazil fell by one position in the ranking of economic growth estimations in Latin America by the Economic Commission for Latin America and the Caribbean (ECLAC). According to ECLAC, an institution part of the United Nations, the region will have another year of low economic results. The estimates predict that Brazil will drop from fourth to fifth place in the ranking of GDP growth. With a 1.7% increase predicted for 2020, Brazil is below Colombia (3.5%), Peru (3.2%), Bolivia (3%) and Paraguay (3%). The prediction for growth in Latin America is 1.3% while South America as a whole is expected to see a 1.2% growth. This year will be the seventh consecutive year of growth below 2%. There is also the risk of new protests in the region, which can harm new investments and the economy in general. “The last time Latin America grew above 2% was in 2013,” says Alberto Ramos, from Goldman Sachs, who predicts 1.7% growth in 2020. Protests in Chile, Colombia and Ecuador, political crises in Bolivia and Peru and the situation in Argentina have contributed to record high levels of uncertainty in the region. According to the consulting company Capital Economics, municipal elections in Brazil have made the political situation even more uncertain, as have the situations in neighboring countries.

Valor Econômico: Brasil deve cair no ranking latino de crescimento

5. Price of beef forces the administration to rethink the minimum wage

The drastic increase in the price of beef in Brazil has led President Jair Bolsonaro to readjust the minimum wage to a higher amount than previously intended. The minimum wage was increased from R$ 998 (USD $247) a month to R$ 1,039 (USD $257), R$ 8 (USD $2) more than what the Federal Budget initially predicted for 2020. Bolsonaro authorized the new amount through a Provisional Measure published on Tuesday in an extra edition of the Official Union Diary. According to the Ministry of Economy, the increase in the price of beef led to an increase in inflation, causing high expectations. The administration says that the R$ 8 (USD $2) difference will cause a R$ 2.4 billion (USD $590 million) increase in public spending. According to Economy Minister Paulo Guedes, minimum wage increases can also lead to unemployment, as salaries cost twice as much to employers. When questioned on the matter, President Bolsonaro said he would not talk to the press so he would “start the year off well.”

O Estado de S. Paulo: Preço da carne obriga governo a rever aumento do mínimo

Brasilia Report

Click here for the Brasilia Report, a weekly analysis prepared by JeffreyGroup Senior Advisor in Brasilia, Gustavo Krieger.