With FGTS and low interest, retail should have relief at the end of the year

The end of the year should bring some relief to the Brazilian retail. The expectation of industry entrepreneurs is that sales on important dates, such as Black Friday and Natal, are better than those of past editions. Consumption should be stimulated by a combination of factors: interest in decline, low inflation and resource injection of the guarantee Fund for time of Service (FGTS) and PIS/Pasep – Altogether, will be R $42 billion released in 2019 and 2020, according to the Ministry of Economics. "The Reading (of entrepreneurs) is more optimistic this year. The release of FGTS and PIS/PASEP resources should help to boost consumption, "says Fabio Bentes, the Economist of the National Confederation of Trade (CNC). Low inflation contributes to this scenario because it prevents the purchasing power of the Brazilian from being corroded. In the 12 months accumulated until September – the last data disclosed – The national index of wide consumer prices (IPCA) accumulates a high of 2.89%. Interest in falling also opens up space to stimulate consumption. The expectation of economists is that the basic interest rate closes the year by 4.75%, and the lowest Selic helps to cheape the cost of credit at the tip. "The level of interest decline has not yet materialized for the consumer, but there is expectation of lower rates," Bentes said. In a still quite preliminary projection, the CNC assesses that sales at Christmas this year should grow 5% over 2018. Result that, if confirmed, will be the best since 2013. The expectation of improvement was also captured by a survey of the National Confederation of Shopkeepers (CNDL) and the Credit Protection Service (SPC). In a survey conducted with 1100 retailers, 58% believe that sales this year-end will grow compared to 2018. And the high average expected by them is 17%. "It's a very encouraging number, it might not come to all this. But it shows the optimism of retail and they (entrepreneurs) have a good ' feeling '. So we can expect a better Christmas, "says SPC economist, Marcela Kawauti. The Economist recalls that the fourth quarter has a great weight in the retail balance. Last year, Christmas sales reached R $53.5 billion, according to the entity, while those of the other traditional commemorative dates (excluding Black Friday), together, totaled R $56 billion. Despite the optimism in relation to sales, entrepreneurs are cautious at the time of investing. Only 23% of respondents by SPC have already contracted or intend to hire employees for the end of the year, whether they are effective or temporary. The expectation is that 103,000 vacancies are open. Orders Grow An indicator that helps measure retail appetite is the industry's stock: The more orders the stores make, the fewer products are stopped at the manufacturers. The stock index measured by the National Confederation of Industry (CNI) had been rising since the beginning of the year, but fell in August (most recent given), from 52.8 to 51.7 points. "You can see, yes, an increase in demand," says Marcelo Azevedo, a CNI economist. The entity measures stocks on a scale from zero to 100. If the indicator exceeds 50 points, it is an indication of product accumulation in relation to what was planned. Azevedo Pondera, however, that the adjustment should intensify until October, closer to the commemorative dates. "With the crisis, entrepreneurs are averse to risk and postponing as much as possible to make requests, afraid to frustrate one more time, err in the prediction and get stranded stock," he said. Although the data show an improvement in mood for consumption, they should be seen with caution. At the beginning of the year, analysts ' expectation was that the Brazilian economy would have a more vigorous performance. The projections pointed to a growth of gross domestic product (GDP) above 2.5%, but the most recent estimates show that the advancement of the activity should be less than 1%. "Consumption presents a gradual recovery," says Itaú Unibanco's economist Luka Barbosa. "It is far from being a result that provoms euphoria, but consumption is gaining traction and must go on like this next year." In reading Itaú, consumption must advance 0.7% in both the third and fourth quarter. It will be better performance than that of the first (high of 0.3%) and the second quarter (0.4%). FGTS and consumption A survey made by the Brazilian Institute of Economics, from Fundação Getúlio Vargas (Ibre/FGV), shows that among Brazilians who will withdraw the resources of FGTS, 32.3% will use the money to consume. The survey also found that 36.3% will use the resources to pay debt and 27.2% should save. "The debt payment has a positive point. It is not a resource that goes to consumption at first, but after the payment of the debt can make room for new consumption, "says Rodolpho Tobler, economist at Ibre/FGV. When there was the first release of FGTS Resources, in 2017, the Ibre did the same research. At that time, 27.8% opted for consumption, 30% per save and 37.7% allocated the resources to pay debt. In 2017, consumers were able to withdraw the entire balance of inactive accounts from the fund, i.e. deposits made by old jobs. This year, the withdrawal will be limited to R $500 per inactive account. The Ibre estimates that the resources of the FGTS immediate withdrawal will bring 1 1 impact of 0.15 percentage point in this year's GDP and 0.35 percentage point in 2020.