May, 12th – 2023


1. Inflation drops 1.13% in the first preview for May, according to IGP-M

The General Market Price Index (IGP-M) registered a 1.13% drop in the first preview for May, according to Fundação Getúlio Vargas (FGV). The index also had the steepest drop in over four years, indicating deflation for the month of May.

The result is explained by the drop in retail and wholesale prices: 0.21% and 1.73% respectively. The accumulated IGP-M in the last 12 months registered a 36.81% increase, but has been dropping overall since it reached a peak in 2021 when it increased by over 30% in a year.

Valor Economico: Prévia do IGP-M mostra maior queda em mais de 4 anos 
UOL: GP-M recua 1,13% na 1ª prévia de maio, após cair 0,90% na mesma leitura de abril

2. The Legislative Consultancy of the Chamber of Deputies advocates for R$ 23 billion spending cut in 2024

The Legislative Consultancy of the Chamber of Deputies recommended that the Brazilian government reduces spending by R$ 23 billion in 2024. The goal is to balance public accounts in the long run. The Legislative Consultancy suggested cuts to subsidies, tax benefits, and personnel costs. The report also recommends changes in the social security system and a ceiling for public spending. The aim is to avoid an increase in debt.

The federal government is introducing a new fiscal framework to replace the spending ceiling, which limits the increase of expenses to the inflation rate. The new rules could lead to expenses above the inflation rate, but with restrictions. Expenses will be updated according to the 2023 Federal Budget.

Folha de S.Paulo: Arcabouço fragiliza lei ao tornar bloqueio de verbas opcional, diz consultoria da Câmara 
Exame: Arcabouço fiscal: consultoria da Câmara defende redução de ao menos R$ 23 bi em gastos em 2024 
Valor Econômico: Novo arcabouço fiscal pode fragilizar a LRF, avaliam técnicos da Câmara

3. Industrial sector grew in March following retraction at start of year

Brazilian industrial production grew 1.1% in March, following two consecutive months of declines: 0.3% in January and 0.2% in February. With these results, the industrial sector’s production level is 1.3% below what was registered in February 2020 – pre-pandemic. Data is from the Monthly Survey of Industry (PIM), published by the Brazilian Institute of Geography and Statistics (IBGE).

Along with oil derivatives, the machine and equipment sectors stood out in March, leading to good intermediate and capital goods performances.

Veja: Indústria volta a crescer em março após começar o ano andando para trás 
O Globo: Indústria avança 1,1% em março, depois de dois meses de queda 
UOL: Indústria opera 17,9% abaixo do nível recorde alcançado em maio de 2011, revela IBGE

4. Record cereal harvest to surpass 300 million tons

According to the most recent IBGE estimates, the Brazilian cereal, legume, and oilseed harvest will total 302.1 million tons in 2023. If confirmed, this volume is 39 million tons – or 14.8% – greater than the 2022 harvest, breaking a record that has lasted since 1975.

Due to these results – according to MB Agro’s estimates – the combined revenue from agriculture and raising cattle in Brazil will be R$ 1 trillion in 2023, with R$ 647 billion coming from agriculture alone. The record harvest, alongside a positive performance for the service sector, is one of the reasons economists have been increasing their GDP growth predictions this year.

O Globo: Ajuda no PIB: Pela 1ª vez na história, IBGE espera safra recorde de mais de 300 milhões de toneladas
Valor Econômico: Renda agropecuária atinge R$ 1 tri, com safra recorde e alta das exportações

5. Preserving the Amazon is worth US$317 billion a year

A study by the World Bank shows that the value of conserving the Amazon is US$ 317 billion per year. According to the report, having a standing forest offers numerous benefits, including climate regulation and biodiversity conservation, and sustaining economic activities such as tourism.

In South America, “ecosystem services” – or the importance of the ecosystem for agriculture in the region, such as rain and protection against erosion – are worth US$ 20 billion a year. The role of the Amazon as a carbon sink is currently worth US$ 210 billion annually, while the Amazon biodiversity and forest cover are worth US$ 75 billion. 

O Globo: Estudo do Banco Mundial aponta que preservação da Amazônia vale US$ 317 bilhões, sete vezes mais que o agro 
Estadão: Floresta Amazônica em pé vale R$ 1,5 trilhão por ano, diz Banco Mundial