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In this article, you will learn how the Brazilian economic crisis has worsened with rising inflation and interest rates, as well as discover the impacts of a growing and uncontrolled pension deficit. We will explore why the government avoids addressing unpopular issues, such as pension reform.
Recent data released by the government and the Central Bank in early November paint a challenging scenario for the Brazilian economy. After the current Minister of Finance (or “Minister of Economy”) announced a package of measures to try to control the Brazilian public debt and control public accounts, the dollar got out of control, direct treasury rates went through the roof, among other problems. never seen before in the history of Brazil. The combination of high inflation, rising interest rates and a growing deficit in public accounts signals that the country is facing a major economic crisis.
However, many expect the government to take control of the situation, although it seems that, in practice, the difficulties are being pushed forward, putting Brazil's economic future at risk.
Current Economic Situation: A Panorama of Uncertainties
According to data from the Brazilian Institute of Geography and Statistics (IBGE) released in September 2024, inflation in Brazil rose to 5,5%, exceeding the central target of 3% set by the government (source: IBGE, September 2024).
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In response, the Central Bank raised the basic interest rate, the Selic, to a record level of 11,25% per year, as a way of trying to contain the rise in inflation and stabilize the economy.
This measure was announced at the last Monetary Policy Committee (Copom) in November 2024, and financial market experts are already projecting new increases for the beginning of 2025 (source: Central Bank, November 2024).
Understand in detail in the following video:
Rising interest rates have a direct impact on the economy, making credit more expensive, hindering economic growth and increasing debt costs for both businesses and consumers. This escalation also reflects a lack of control over public accounts.
The government faced an accumulated deficit of R$167 billion between January and September 2024, according to data from the Ministry of Economy (source: Ministry of Economy, October 2024).
Although revenue increased by 6% compared to the same period in 2023, driven by higher taxes and the elimination of subsidies, the accelerated pace of expenditure continues to put pressure on the national budget.
For many economists, the only sustainable way out would be to contain spending, something the government has avoided. According to projections by the Independent Fiscal Institute (IFI), maintaining this level of deficit and getting inflation out of control could lead to an even more serious economic crisis in 2025, if the government does not implement austerity measures and urgent fiscal reforms (source: IFI, October 2024).
The Social Security Gap: A Time Bomb
Another critical point is the growing Social Security deficit. In September 2024, the Ministry of Social Security announced that the social security deficit reached R$50 billion, an increase of almost 20% compared to the same period in 2023 (source: Ministry of Social Security, September 2024).
This increase reflects a pay-as-you-go system that faces serious demographic and economic challenges. In practice, contributions from active workers finance the benefits of retirees, but the ratio between the two groups is falling.
In the 1990s, there were about nine workers for every retiree; today, that ratio has fallen to less than five. This structural change is worrying, as experts indicate that to sustain the social security system, it would be necessary to maintain at least seven active workers for every retiree (source: Brazilian Institute of Geography and Statistics, IBGE, August 2024).
PRIMO RICO warns about a new crisis that is coming to Brazil
The increase in life expectancy and the lack of new contributors to the system result in an unsustainable situation, in which the social security deficit continues to grow with no prospect of improvement.
The informal market also contributes to this crisis. Data from the Continuous National Household Sample Survey (PNAD Contínua) of August 2024 show that Brazil reached a record number of informal workers, who represent a significant portion of those employed but do not contribute to Social Security (source: PNAD Contínua, IBGE, August 2024).
With fewer people contributing and more people demanding benefits, Social Security is becoming increasingly unsustainable, being described by some experts as a true “time bomb” for Brazilian public finances.
Pension Reform: A Postponed Measure
Despite the urgency, the current government, which adopts a populist stance, avoids addressing the pension issue, even with the constant growth of the deficit. Politicians and analysts recognize that the reform is an unpopular measure, and the government seems to prefer to postpone this discussion so as not to lose electoral support.
However, by avoiding reform, the problem is pushed onto future generations, who will have to deal with a Social Security system that is possibly unable to pay its benefits.
The last significant reform took place in 2019, but with demographic changes and the continued deficit, there is now a consensus among economists and experts that a new reform is necessary.
Measures such as increasing the minimum retirement age, encouraging the formalization of work and adopting a more sustainable system are some of the actions advocated by experts to restructure the system (source: Pension Reform, IBGE, August 2024).
Preparing for the Future: How to Protect Your Assets
With the economy weakened and Social Security in a critical situation, it is prudent for people to start thinking about alternative strategies to ensure a peaceful retirement and protect their assets.
The first step recommended by financial advisors is to conserve resources, avoiding unnecessary expenses and focusing on a solid financial reserve. In times of crisis, maintaining a balanced budget is essential to avoid accumulating debt.
Additionally, finding ways to increase family income can be a smart solution. For those who already have a formal job, exploring additional activities, such as freelance work or app-based services, helps to supplement income and offers greater financial stability.
This diversification of revenue sources is an effective strategy for dealing with the economic adversities that Brazil faces.
Another important point is to consider applying part of the resources in international markets, especially in dollar-denominated assets.
With the Brazilian currency devalued and domestic interest rates rising, investing in stocks in the United States or in funds linked to the dollar is a way to protect assets against the instability of the real and, at the same time, participate in markets with greater growth potential.
Share and Comment
Leave your opinions in the comments and share your strategies for facing the crisis, expanding the debate and promoting community engagement.
The government may try to ignore the gravity of the situation, but economic reality does not wait. How are you preparing to protect your future and that of your family? In times like these, taking action
Sources and references for this article: https://clickpetroleoegas.com.br/wp-content/uploads/2024/11/CRISE-ECONOMICA-NO-BRASIL-2024.pdf
It is important that there is a reform, especially in the judiciary, public servants and politicians.
https://www.infomoney.com.br/economia/haddad-diz-que-inflacao-esta-controlada-e-que-ajuste-nas-contas-precisa-continuar/amp/
I don't think we live in the same world, lol. What is Lula going to do? If he hasn't done anything in 16 years, lol. Just look at the numbers. In 4 years, state-owned companies were making a profit and now they're making a loss. How is the **** going to change that, knowing that the PT has the reputation of corruption on its back, money in its underwear, oil scandals, mensalão scandals, and the list is long, lol.
Selic went to 11,25% in the 4th paragraph it says 13,75%, please correct.
And the accumulated inflation in the last 12 months according to the IBGE is 4,76. 2024 would be even lower because it doesn't have 12 months. I think this text is copied and pasted from somewhere that is not reliable. Or it is an old text. When the selic was 13,75 and inflation was 5,5. Back in 2022 maybe.
And furthermore this year's deficit is 105b and not 160b according to the same source cited. Whoever wrote this thinks we are ****.
The text is a piece of fiction t3rr0r1st@…
Hahahahahaha.
It makes all the difference!!!
Lie. The **** is improving the country for the rats..., I mean, workers.
Of course, Brazil cannot afford to pay for so many benefits to people. I work with families and it is common to find young people living on some kind of benefit. The federal government needs to invest in formal jobs where people can contribute to social security. Many people do not want to work so they do not lose the Bolsa Família program. Young people, how can Brazil develop if there is no job creation?
The big problem in Brazil: if the swindlers are called big businessmen, it's not Bolsa Família, BPC, retirement of minimum wages, that won't bankrupt any country. Brazil is a rich country, but this wealth is in the hands of half a dozen swindlers who only want this wealth to be theirs. If this wealth is more distributed and distributes the wealth that belongs to Maria, João José, others will see if there is money left over. But when it comes to taxing the swindlers, everyone has it. Which is also the ones who paid for this biased article.
Truth
How I wish that big businessmen would close their activities in Brazil, then you would wake up and see where the real problem comes from.
“encerracem”?? Don’t murder Portuguese! Why not write fechassem!
People barely know how to write and think they know what the financial market is. Learn the easy way: where businessmen make exorbitant profits, there are people who go hungry. Workers and the poor who defend businessmen are compared to cockroaches that idolize insecticide. Businessmen are rich because of the workers. The sweat of their labor produces their wealth. They do not do workers any favors; they simply pay low wages to get richer.
Jesus, Mary, Joseph
There are still people who think like they did in the 19th century.
Congratulations, great businessman! What are you complaining about?
Just idle talk! These big businessmen have been whining since the times of the Corona, but they won't let go of the bone. Where in the world, if not in China, can a businessman pay the miserable 1500 reais per month to a worker who dedicates 8 hours a day, or more, to his company?
The big expenses start with the government that doesn't generate any money, because it lives off our money. Money from all the workers who support all those who don't work and the perks of the entire political class.
The right thing to do is to create jobs and create a law so that politicians earn a salary set by the people and not the salary that they themselves determine and approve among themselves.
The role of the government has NEVER been to generate money. That is a typical role of the private sector. Those who demand that the government generate money do not understand what government is, to begin with. To make matters worse, there are jobs here in Brazil. The problem is the concentration of income. A businessman making hundreds of thousands, sometimes millions, off the backs of masses of workers being paid a measly R$1500 for 44 hours of work per week. If that is not modern slavery, what is?
Politicians do not need to receive a salary from the government because, for the most part, they are all businesspeople.
Jesus, Mary, Joseph
There are still people who think like they did in the 19th century.
It's simple, it "orders" the federal, state and municipal governments to lower taxes and labor charges, then business owners can increase salaries and still lower the prices of the products sold.
They don't know, but due to taxes and labor charges, business owners end up spending almost twice as much as an employee's salary.
This is the cost of POPULISM, which really serves as an electoral springboard, as they say!
It is interesting how some people are against the Bolsa Família, but no one talks about it or does not know that the government spends much more on financing rich farmers who receive subsidized financing. And there are still millions of military personnel who also suckle at the teats of the Brazilian people.
Commenting on the agricultural stock market is not in the interest of a certain group in this country, nor of the banking stock market. That is beside the point!
If someone is receiving benefits illegally, you have to report it. Tell them the name and address of the criminal. Give them everything you know! Or are you also an accomplice in this scam?
There is no need to read or see the identical reality of other countries governed by the left because the end is always the same! ****, incompetence and ruin in every sense! It is for these and other reasons that I am absolutely certain that it was not we, the people, who elected this tragedy! May God and Trump help us because the nefarious and arbitrary absurdities continue with full force! 🤦👎
Q **** they let the tire speaker comment here lol
Better than being a marginal star lol
Of course, because the best thing to do is pray for tires and salute another country's flag.
As for social security, all we need to do is follow French laws: every citizen is responsible for paying their social security, regardless of their employer. Brazil's problem is that it treats adults as if they were children in need of a guardian. The government should create a program to clarify the truth and not try to be the father of other people's children.
You really have to see how wonderful Argentina is!!!
You should be ashamed and that's how you call yourself patriots, I'm more of a Brazilian. Speculation should be **** without the right to appeal, it's an attack against your own country and betraying your own country.
Dude, the Union issues public bonds. It causes this, not speculators. I myself invest in Treasury Direct. That's why I say schools should teach economics and financial management.
Daniel, I recommend watching on YouTube Maria Lúcia Fattorelli, a retired auditor from the Federal Public Ministry, who explains clearly better than any teacher in the classroom, it is worth watching and sharing.