The uncertain future of the world market

2022 is close to ending and the projections predicted for the beginning of the cycle were wrong. Brazil may grow close to 3% (0.5% was forecast), while inflation will be around 6% (9% was forecast) and unemployment at 8% (12% was forecast).

Even with these good results, the financial market aims further ahead. And the future so far is still in doubt. Under discussion in the National Congress, the transitional PEC points to several concerns on the fiscal side.

In practice, an increase in public consumption is suggested due to the flexibility of the spending cap. As expected, the financial market premeditated fiscal easing. This month, the Stock Exchange, interest rates futures, in addition to the dollar, experienced strong volatility.

Investors are already aware of the hole in the ceiling. The doubt that arises is in relation to which value and term outside the ceiling. Uncertainty arises in relation to one, two, three or four years, but due to the circumstances, the best forecast scenario would be something around R$ 120 billion for 1 year.

There is another concern

There is another concern, one related to the new economy minister. Fernando Haddad was confirmed to the post this Friday (09/12). A choice not much appreciated by the market, since the former mayor does not have a liberal policy.

External uncertainties continue. In the US, despite the last speech by Jerome Powell – president of the American Medial Bank (FED) – including the possibility of a decrease in the rate of increase in interest rates starting this month, data on jobs in relation to inflation are worrying, This is due to the heating up of the labor market.

With higher-than-expected job creation and a lower unemployment rate, they may stimulate demand-side inflation. Adhering to this risk, the easing of monetary policy may consequently be postponed and the US interest rate may remain high for some time.

High interest

Due to the high American interest rates, there is a discussion about the possibility of the US economy starting a recession in 2024. Some activity indexes (PMls) and the beginning of layoffs in large companies contribute to this possibility.

Considering the economic slowdown in the USA, something that consequently is not good for Brazil. Meanwhile in China, the news is good in light of the easing of the Covid policy, consequently benefiting commodity companies due to the increase in imports from the Asian giant.

On the other hand, in Europe, the energy crisis continues and recession becomes more and more certain. Thus, both the internal and external situation bring a series of risks. All of our SaraInvest portfolios take into account this more adverse and difficult environment.

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