Projections and Corrections: How did our Brazil predictions for 2021 turn out?

Every January, I post a blog trying, based on my experience and background, predicting economic moves, political changes and sometimes election results.  Here is the link to last year’s predictions summarized in 11 points.

I also published a longer piece showing the reasoning or the whys and wherefores of how or why I forecast the stated outcomes.  My predictions seek to be objective and thus can be measured in terms of a concrete outcome which can be shown.

Here is the link:

Of course, we are still suffering in Brazil the ravages of Covid.  That certainly was the big surprise of 2020, but obviously had to be taken into account in 2021.  Unfortunately, Brazil passed the ghastly mark of over 600 thousand fatalities attributed to the virus.  I confessed that I did not foresee 200 thousand deaths in 2020 and still cannot process the additional 400 thousand added in 2021.  Brazil was ravaged.

Looking at list of 11, my first prediction was that Bolsonaro would remain in office and not be impeached.  On that count, 1 for 1.

My second prediction dealt with Covid and the continuity of the pandemic and its management or mismanagement.  I was not foolhardy enough to predict a vaccine or the number of additional deaths.  I did say the General Pazzuello, the Health Minister would fall and indeed he is gone and not much missed.  So, correct on this point.

My third prediction dealt with the economy and the growth of the GNP or gross national product.  I clearly stated that Brazil would grow less than 1% and was wrong.  Although Economic “Czar” Guedes had long predicted a V shaped recovery and growth of 5%, he proved to be more prescient and better at taking into account the growth after the pandemic related shrinkage in 2020 plus the impact of the spending program and major transfer of funds through what used to be Bolsa Familia (Family Fund Program) and later rebranded Auxilio Brasil (Brazil Support).  While the final numbers have not yet confirmed, Brazil’s economy did grow at around 4% in 2021. So my mistake and 1 big wrong on this basic economic indicator.

Still on the economic front, predictions 4 and 5 dealt respectively with unemployment, inflation and interest.   While correct in the direction of my predictions and very close in terms of unemployment(13% then and 12.3 % now), inflation worsened to double digits (over 10 percent year on year) while I only anticipated “higher than 5%”.  Likewise, with interest rates (SELIC), I proved a bit wishful anticipating 4% while the Central Bank’s basic rate moved to 9.25% at year end.  Doing my self-grading here, I will say 1.5 out of 2 points on these economic indicators.

Items 6 and 7 dealt with foreign policy with 6 stating that the anti-globalist and arch conservative Foreign Minister Ernesto Araujo would receive his marching orders and indeed he did.  Araujo, who had helped negotiate the Mercosur agreements in the 1990’s and, with Bolsonaro, had looked to a Mercosur-Europe FTA which also, as I predicted, failed to materialize and faded into the distant horizon.  Brazil and Argentina need each other but  President Bolsonaro does not have the ideological and pragmatic flexibility to get along with the left leaning Fernandes government. Moreover, with the ongoing destruction of the Amazon Forest, the Brazilians fail to please the Europeans, who also do not want to move quickly to protect their farmers. On these, score 2 out of 2 but recognize the complexity involved.

Item 8 stated that there would be “less than 50 billion in FDI”.  Central Bank data shows over 52 billion through the first 11 months and there will probably be another 4 or 5 billion December.  Brazil definitely did recover from the dismal 25 billion of FDI in 2020 but has not approached the 92 billion plus registered in the heydays of 2012.  So, on this point, I missed and will score no point.

Item 9 dealt with the perennial problem of violence in Brazil and predicted an increase in police violence and death at the hands of the police.  This definitely happened.  However, I also predicted a resurgence of  homicides not committed by the police and this did not happen.  Brazil continues to be a violent country, but Bolsonaro’s program of arming the population led perhaps paradoxically and indirectly to a reduction in the number of murders registered.  Score ½ point.

Item 10 addressed the topic of Brazil’s long-term aspiration of OECD membership and there was no progress on this front as Brazil, mainly because of the power of Congress and the Centrao fails to be transparent in how its public accounts are managed.  Brazil has a legal spending cap which has been surpassed, but by using legal maneuvers.  The Ministry of the Economy and Paulo Guedes affirm respect for the spending cap and still deny overspending although this is what has taken place in 2021 with the pandemic and with the milking of the system with an eye to the elections this year.  Score 1 point.

Finally, Brazil has failed to contain its brain drain and the falling behind in education, science and technology.  Bolsonaro severely reduced the budget for the Ministry of Science, Technology and Innovation and almost any professor or researcher who can get an appointment abroad will take it.  Brazilian talent continues to flow abroad unrestrained.  1 point

If I am not in error, something always possible, I calculate 8 points out of 11 or 73% which we can call a gentleman’s C and maybe not brilliant or lucky but also not too shabby.

2 comments on “Projections and Corrections: How did our Brazil predictions for 2021 turn out?

  1. Helga Hoffmann says:

    Dear Steve, only today I read it. (I got the flu in December.) Very good. Now I hope you will try the 2022 predictions. It will be even harder to predict what happens in 2022, in particular in October. On top of it, the year marks the 200 years of independence. Abração e Feliz Ano Novo. Helga

    Helga Hoffmann Economista, membro do GACINT-IRI/USP

    Colaborador de

    e-mail: tel 5511 3663 6019


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