Lula's fourth term tests the balance between investment and public accounts
Crusoé sees fiscal adjustment as politically difficult, and Rui Costa talks about increasing the GDP investment rate from 17% to 20% or 21%.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM CRUSOÉ · 2 MIN
According to Crusoé, Lula won his fourth term in the election on Sunday, the 25th. The victory puts at the center of the economic debate a question that is of direct interest to those who invest: how will the government fulfill the promises made in the campaign without losing control of public accounts?
For the author of an opinion article published by Crusoé, fiscal adjustment must be politically difficult. The assessment is that, after the campaign's promises and spending, any tightening of accounts will face political resistance.
Rui Costa, senator elected by PT from Bahia and former minister of the Civil House, spoke this Thursday (29) to Rádio Bandeirantes and detailed what the government intends in the next cycle. According to him, Lula will seek to increase the GDP investment rate from 17% to 20% or 21% in the fourth term.
Using the same reasoning, Costa cited improving logistics as a way to reduce production costs in industry and agriculture. The material collected does not provide values or deadlines for these goals.
The challenge lies in combining both fronts. Investment on the rise requires resources and predictability, and Crusoé's own assessment points out that fiscal adjustment tends to be more difficult after the campaign. For those who defend fiscal responsibility, free markets and lower taxes, the central question is whether the expansion of investment will be accompanied by expenditure discipline.
So far, what is known are intentions. There are still no details on how the investment targets would be financed, and the path to 20% or 21% of GDP depends on decisions that were not detailed in the statements obtained.
What changes for the investor
For the investor, the point of attention is the trajectory of public accounts. When fiscal adjustment progresses more slowly, the market tends to demand a higher premium to carry risk, and this movement can appear in interest rates, exchange rates and the shares of companies more exposed to the domestic cycle. On the other hand, if improved logistics and increased investment materialize, sectors linked to infrastructure, industry and agribusiness could benefit in the medium term. None of this is a price prediction: what is at stake is the credibility of the fiscal targets, which should guide the reading of those who follow the stock market, interest rates and the dollar in the coming months.
Automatically translated from Portuguese.
