By FERNANDO NOGUEIRA DA COSTA*
The analysis errors of the detractors of the Lula government and the anything-goes for the re-election of the current misgovernment
“What country is this?\ Third world if it is \ Joke abroad\ But Brazil is going to be rich\ We're going to make a million\ When we sell all the souls\ Of our Indians at auction\ What country is this?!”
There is a dispute of narratives or stories to explain it. However, do statistical numbers not describe the Brazilian economy more objectively? They allow to falsify the propagated mythology as if it were true under the error of thought called “social proof”. No matter how many people find an idea to be correct, a majority does not make it true.
In this case, the idea that “Lula was lucky because of the tree de commodities”. Or else the arrogance of the ideological assertion: everything good in the Lula government, in the first term, was the continuity of the previous economic policy – but without good results, in the FHC government, its continuation by the PT opposition would be a contradiction. Proceres from O Mercado have been repeating these self-deceptions for two decades.
The official National Accounts do not allow lying. The percentage shares of economic activities in added value show the structural changes since then.
Agriculture represented only 5,5% from 2000 to 2005, it dropped to 4,8% with the large GDP growth in 2010. In 2019, it was still at 4,9%. After the 2020 depression, due to exports, it dropped from 6,8% in 2020 to 8,1% in 2021. Is this why “farmers” vote for delay? Big mistake...
The process of “deindustrialization” did not evolve during the two Lula governments: the Manufacturing Industry produced 15,3% of added value in 2000, rose to 17,4% in 2005 and returned to 15% in 2010. if its share loss with 12% in 2019, 11,2% in 2020 and 11,3% in 2021.
There was indeed a growth of Extractive Industries from 2000 (1,4%) until the end of the commodity boom in 2012 (4,2%). Recent external shocks led to a recovery from 2019 (2,9%) to 2021 (5,5%).
On the other hand, with the housing financing policy and the PAC (Growth Acceleration Plan) for public works, the Construction Industry rose from 4,6% in 2005 to 6,3% in 2010. In 2019, it was in 3,9 .2021%, but in 2,6 it dropped even further to XNUMX% of value added. The current lack of government is totally inoperative in terms of incentives for this industry with the potential to generate millions of jobs for workers looking for their first opportunity.
Services represented the same 67,8% from 2000 to 2010. They had a decline from 2019 (73,3%) to 2021 (69,8%). From just over 2/3 to almost ¾, these shares demonstrate the predominance of urban services, in Brazilian society, by the way, as in all Western society in the richer North.
But the biggest evidence of the detractors' analysis error, by disqualifying, defaming and devaluing the importance of the Lula government, accusing it of directing the Brazilian economy towards a supposed "primary-export economy", is in the analysis of the percentage shares of the demand components in GDP. The mainstay of the Brazilian economy is the Household Consumption Expenditure. In 2005 and 2010, it was just over 60% of GDP. It fell from 65% of GDP in 2019 to 61% of GDP in 2021.
In the social-developmentalist era (2003-2014), Government Consumption Expenditure remained practically the same at 19% of GDP. In the Ultraliberal Era (2019-2021), it dropped from 20% in 2019 to 19% in 2021.
Gross Fixed Capital Formation and Stock Changes grew from 17,2% in 2005 to 21,8% at the end of the Lula government in 2010. In the current mismanagement, it remained at 15,5% in 2019, 15,9% in 2020 (with an absolute drop in GDP) and increased to 18,9% in 2021, but not due to a sustained growth recovery plan.
The “X of the question” concerns net exports: the difference between exports and imports. In 2005, exports reached +15,2% of GDP and imports -11,8% of GDP, that is, a positive balance of 3,4 percentage points. In 2010, these percentages were, respectively, +10,9% of GDP, -11,9% of GDP, that is, a negative balance of one percentage point. So who can prove the commodity boom been the key determinant of GDP growth (7,5% in 2010) in the Lula government?!
It was indeed relevant to take advantage of the opportunity to accumulate foreign exchange reserves (US$ 380 billion reached under Dilma Rousseff's government) and the Brazilian economy was no longer threatened by speculative attacks on the dollar exchange rate and/or by exchange rate crises. Thanks to investments made in oil exploration in the pre-salt layer under deep waters, under PT governments, Brazil became an oil exporter!
In 2019, the trade balance was in deficit by -0,7 percentage points (+14,1% of GDP in exports and -14,8% of GDP in imports), but there was no currency crisis. In 2020, it reversed to a surplus of +0,7 percentage points (+16,8% against -16,1%) and, in 2021, to a trade surplus of one percentage point (+20,1% against -19,1 ,XNUMX%).
These trade balances, evidently, do not have the capacity to sustain economic growth in the long term. This, in a semi-continental country (½) with a large population, is supported mainly by its internal market and less by the external market. Active public policies, with a view to social inclusion, expand it!
Exports increase productivity, already stimulated by the innovations of EMBRAPA and the agricultural machinery and equipment industry, with subsidized credit from BNDES, and the competitiveness of exporting companies also with subsidized credit from Banco do Brasil. This is because they need to adapt to the requirements of the foreign market, enhancing the exchange of fertilizers, technologies and know-how.
The 10 most exported products by Brazil in 2020 were: 1st Soy; 2nd Crude petroleum oils or oils obtained from bituminous minerals; 3rd Iron ore and concentrates; 4th Fuel oils derived from petroleum or bituminous minerals; 5th Fresh, chilled or frozen beef; 6th Cellulose; 7 Poultry meat and its edible offal, fresh, chilled or frozen; 8 Soy bran and other animal feed (excluding unground cereals), meat meal and other animal meal; 9th Products for the Manufacturing Industry; 10º Sugars and molasses. Coffee did not enter this ranking.
After the social-developmentalist era, the country lost five positions in the world ranking of exporting countries. In 2008, it ranked 22nd; currently ranks 27th.
Brazil, according to the CNI, has also been losing relevance when evaluating world industrial production. In 1994, the country contributed with 2,7% of the added value of the world manufacturing industry. Its share dropped to 1,2% in 2019.
Shipments from Brazil for the export of industrialized goods were below those of basic goods: 48% and 52%, respectively, mainly due to the drop in sales to Argentina, which is continuously hostile due to the current mismanagement, as well as China. Lula's commercial foreign policy was exchanged for the disaster of geopolitical ideology.
According to the index Best and Biggest 2020, a survey conducted by the magazine Examination, the 10 companies receiving the highest external net revenues were: 1º Vale (US$ 19,2 billion); 2nd Petrobras (US$ 17,7 billion); 3rd Agricultural Cargill (US$ 9,3 billion); 4th Shell Brazil (US$ 7,7 billion); 5th Bunge (US$ 5,3 billion); 6th Louis Dreyfus Company ($4,2 billion); 7th Suzano Papel e Celulose (US$ 3,6 billion); 8th – JBS (US$ 3,3 billion); 9th Amaggi Commodities (US$ 3,2 billion); 10th – CSN Mineração (US$ 2,7 billion). There were three parastatals, four foreign and three Brazilian.
Operations with common shares of Vale and preferred shares of Petrobras represent a quarter of the volume of trades carried out in the B3 spot stock market in October 2022. They returned to the level of 2014, when they represented 25,16%, according to a survey by TradeMap .
Even with the slowdown of the global economy (“deglobalization”), which generates uncertainties for commodities, the increased participation of international investors in the local market in recent months helps to explain the speculative movement. This is because foreigners tend to prioritize securities with more liquidity, precisely such as those of oil and iron ore producers, in addition to shares in large banks.
Among foreign investors' inflows and outflows (54% of the total volume of purchases and sales of shares), in the secondary segment of B3 (shares already listed), their annual surplus increased to R$78,53 billion. Institutional investors (26%) suffered withdrawals from stock fund portfolios and their annual balance is negative by R$ 109,81 billion. Individual investors (15%) opted for fixed income and also have an accumulated deficit in 2022 of R$5,29 billion.
Petrobras' ordinary shares, with a large distribution of dividends instead of making reserves, for self-financing the necessary investments, accumulate an increase of 95,3% in 2022, while preferred shares advance 97,4% in the year. The company reached the highest market value in history of R$ 520,6 billion. The value of its debt totaled R$ 280,6 billion.
Therefore, the value of the company was BRL 801,2 billion in total assets, that is, own liabilities plus third-party liabilities. Both creditors and shareholders (many are foreigners) are the two “owners” of the company.
The short-term vision of the neoliberals – de-incrusting the market from society – places profit maximization as the immediate objective of Petrobras' current management. It is the perfect portrait of the current mismanagement: an anything-go for re-election, in the short term, at the expense of compromising the Nation's future in the long term!
*Fernando Nogueira da Costa He is a full professor at the Institute of Economics at Unicamp. Author, among other books, of Support and enrichment network. Available in https://fernandonogueiracosta.wordpress.com/2022/09/20/rede-de-apoio-e-enriquecimento-baixe-o-livro/
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