However, several analysts maintain that this will not be enough to reactivate the real economy, whose decline is expected to be 3.5% this year. Although some data maintain that activity reached its bottom between April and May, the unknown is when and with what force it will rebound after the approval (within the Bases Law) of the labor reform and the famous Large Investment Incentive Regime. (RIGI).
Law Bases and jobs
For several analysts, no regulation will generate jobs if consumption does not first recover. And they maintain that although the RIGI will have an expansive effect, it will not be immediate and may not even have an impact this year.
They also assure that, although inflation is falling, employment is beginning to be the big concern. This is despite the fact that the Government began to calibrate the level of adjustment to avoid an even greater drop in income, consumption and economic activity, for example by delaying the adjustment of rates.
Thus, analysts maintain that the most immediate path to a strong recovery could only occur through a recomposition of income that stimulates consumption. And it would also be necessary, among other things, to improve the tax structure and not let the exchange rate fall further behind. In the best scenario, the recovery would begin in the second semester but would be gradual.
The biggest noise is in the fiscal field, since the Senate refused to approve the Income and Personal Assets initiatives, key to the new scheme designed by the Government. Thus, it is expected that the Government will insist on both taxes because approved in this way they reduce the chance of lowering the Country Tax and force us to rethink what expenses or income will have to be addressed to maintain fiscal balance. “The problem, some analysts say, is that In Deputies, it could be negotiated to support the fiscal package in exchange for not vetoing the change in pensions promoted by the opposition.
On the other hand, the approval of the Base Law improves the forecasts recently given by FocusEconomics analysts, for whom it was “key” the sanction of the Law so that the country begins to take off.
According to the report, the strong fiscal adjustment carried out by the Government had a positive impact on the inflation projection, which fell 9 percentage points for this year and will end at 247% annually. This revision is based on a trend of slowing monthly inflation, influenced by the restrictive fiscal policy and economic adjustment measures implemented.
The report also predicts that the official dollar will reach $1,330 this yearwhich implies a faster devaluation than the current 2% monthly (crawling peg), to maintain the competitiveness of exports in an inflationary context.
