Reuters, BUENOS AIRES, July 15 – According to a Reuters poll, Brazil’s economy will continue to experience a so-called “jobless recovery” following this year’s inflation spike, while growth prospects in Mexico look stronger despite fears about a potentially harsher monetary policy in the United States. On the surface, Brazil’s macro outlook appears to be improving as consumers recover from the COVID-19 pandemic, corporations experience a resurgence in M&A deals, and the agricultural sector benefits from robust global demand. find out more Recent increases in GDP predictions, on the other hand, are at conflict with a slew of issues. The biggest issue right now is rising inflation, which is likely to be followed by consistently high unemployment into next year’s general elections in Brazil. “Because the economy will take time to re-absorb employees and restore employment,” Bank of America analysts wrote in a study, “we continue to estimate average unemployment to linger in double digits this year, at 13.6 percent, from 13.6 percent in 2020.” “High unemployment will restrain services inflation, which accounts for about 40% of headline inflation,” the bank added. Due to currency depreciation and other causes, consumer prices have risen this year, pushing the central bank to become ultra-hawkish. find out more According to the consensus estimate of 20 economists questioned between July 5 and July 13, Brazil’s average jobless rate for 2021 will be a record 14.2 percent, according to the Reuters survey. This was in contrast to a large increase in GDP predictions. A larger sample of 40 respondents predicted that Latin America’s No. 1 economy would grow 5.1 percent in 2021, significantly above the more moderate 3.2 percent predicted in April’s poll. Inflation estimates have also risen, from 5.1 percent last quarter to 6.5 percent this quarter. During the pandemic, many Brazilians have lost their jobs. President Jair Bolsonaro’s pro-business policies have also been criticized. Other numbers, according to the government, demonstrate that employment creation is strong. continue reading Bolsonaro and his expected opponent, former center-left President Luiz Inacio Lula da Silva, have yet to formally launch their candidacies for the 2022 presidential race, which is still more than a year away. President Andres Manuel Lopez Obrador of Mexico appears to be in a stronger position than his Brazilian colleague. While both are embroiled in corruption allegations, Lopez Obrador is faring better. find out more Similarly, Mexico’s economy is improving, with higher growth and lower inflation than Brazil’s. GDP and consumer prices in Mexico are predicted to climb 5.9% and 5.1 percent this year, respectively, compared to 4.7 percent and 3.9 percent in April’s survey. Mexicans are paying close attention to the Federal Reserve of the United States’ intention to gradually reduce its massive stimulus program. It has so far been favorably received on both sides of the border, rather than acting as a barrier to capital flows. Despite a drop in Brazil’s predicted growth to 2.2 percent from 2.3 percent in 2022, the survey predicts Mexico’s economy will rise 2.9 percent next year, up from 2.5 percent in April’s poll. Analysts at BBVA Mexico noted in a research, “We raise our GDP prediction for 2022 from 2.8 percent to 3.0 percent, owing to a better investment outlook. In 1Q22, this rise will most certainly allow formal private employment to return to pre-pandemic levels.” (For more on the Reuters global economic poll, see: ) Gabriel Burin did the reporting and polling, and Jonathan Oatis did the editing. The Thomson Reuters Trust Principles are our standards./n
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