'Worst is over': Business confidence in the Brazilian economy sees highest increase in two years, says FGV
The Business Confidence Index (ICE) recorded a 3-point increase in June, reaching 94.5 points, the highest increase since July 2021
247 – Business confidence in Brazil registered a significant increase in June, indicating renewed optimism and suggesting that "the worst, in terms of economic slowdown, is already behind us," according to the Superintendent of Statistics at the Brazilian Institute of Economics of the Getulio Vargas Foundation (FGV IBRE), Aloisio Campelo Jr.
The Business Confidence Index (ICE) recorded a 3-point increase in June, reaching 94.5 points, representing the most significant increase in the past two years, as reported by Valor Econômico. This was the highest increase since July 2021, when the index rose by 3.3 points, and it brought the indicator to its highest level since October 2022, with 98.2 points.
Out of the four sectors comprising the ICE, three showed an increase in confidence in June compared to May. The industrial sector (+1.1 point), services sector (+3.7 points), and trade sector (+6.9 points) registered significant increases. The only exception was the construction sector, which experienced a slight decline of 0.1 point in confidence last month. According to the expert, the first three sectors had a period of weak growth at the beginning of the year, but now they show signs of improvement.
Campelo Jr. explained that the worst moment for business owners was the "turn of the year"; however, he highlighted that there were positive responses both regarding the present and the future, which can be observed in the evolution of the sub-indicators comprising the ICE. The Current Situation Index (ISA) increased by 4 points, reaching 95.1 points, while the Expectations Index (IE) advanced by 2.8 points, reaching 96.2 points. "The ISA improved more," he added. "There was an improvement in the perception of the economic environment," emphasized the expert.
Among some of the factors mentioned for the improvement in assessments of the current situation, Campelo Jr. highlights the significant drop in inflation, which increases the pace of domestic demand by relieving pressure on households' budgets, and the definition of fiscal framework, which provides "greater serenity to the political scenario."
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