Brazil should take four years to regain pre-crisis standard of living

The gross domestic product (GDP) per capita-sum of wealth produced by a country divided by its inhabitants-rose just 0.2% in 2017, for R $31,587. It was the first increase in annual basis from 2013. The Brazilian will still wait, though, four years to retrieve the standard achieved in the pre-crisis period. According to calculations of the LCA consulting, beyond the modest performance in the year, the GDP per capita stopped growing in the fourth quarter. The indicator retreated 0.14% compared to three months earlier, in series with seasonal adjustment, after positive results in the three previous readings-grew 1.1% in the first quarter, 0.4 percent in the second and 0.05% in the third quarter of 2017. "The economy grew strongly in the first quarter, pulled by the agribusiness sector and industry. Then came the consumption, with support of the FGTS (guarantee fund Service time) [release of inactive account deposits]. Since then, GDP began to slow down on the shore and, as the population continued to grow 0.2% per quarter, the indicator just back the negative field at the end of the year, "said Rodrigo Nishida, Chief Economist of the LCA. The additional problem is that the economic recovery has not yet affected everyone. The labour market has absorbed a small portion of the contingent of unemployed. At the end of last year, 12.7 million workers were on the job queue in the country, according to data of IBGE (Brazilian Institute of geography and statistics). Of these, 5 million were in search of work had a year or more. In addition, the wealth generated is unevenly distributed. FGV Social data show that inequality rose during and after the recession, peaking at the end of last year the largest concentration of the last 30 years. According to the IBGE, the Gini-index measure of inequality of income distribution-0.549 in 2016, similar level to that of Lesotho (0.542). According to calculations of the Brazilian Institute of Economics at the Getulio Vargas Foundation, the recession of 2014 to 2016 reduced in 8.7% GDP per capita in the country, the second largest fall recorded since 1900-i.e. in 116 years. This loss of wealth per inhabitant was higher only than in the recession of 1981 to 1983 (-12.3%). With the acceleration of economic activity going forward, the expectation is that the indicator start a more consistent recovery. In the calculations of the 4E consultants, the advance will be 1.2% in 2018 and 2.5 percent the following year. The indicator must recover the pre-crisis year 2013-within four years. The economic recovery will be slow, in part because the population will keep growing. The Fiscal monitoring, Energy Secretary and the Ministry of finance, Mansueto Almeida, agrees with the idea that the country will take a while to retrieve the per-capita income, which grew at less than the economy. "It will take a while to retrieve the per-capita income, which is falling from 2014," said Mansueto, after participating in the debate on the report of the OECD (Organisation for economic co-operation and development) on the brazilian economy, at Insper in Sao Paulo. In the Secretary's estimate, the per-capita income in Brazil accumulated a fall of more than 9% during the recession from 2014 to 2016. For him, the recovery requires that the economy enters into a consistent cycle of growth in the coming years. "If the economy to be growing at around 3%, you will retrieve the per-capita income there around 2020 relative to what was in 2011," predicts Mansueto. Alejandro Padron, one of the partners of the 4E consultancy, believes that other economic indicators pointing to an improvement of well-being of the population going forward. "We have a prospect of improvement in the labour market, in addition to lower inflation, lower interest. So the consumer has had a big fear about the future than it has today, "said Padron.