CNI puts Brazil's cost of R$1.7 trillion per year at the center of the economic debate
According to Estadão, the entity wants to treat taxes, interest, bureaucracy, infrastructure and legal uncertainty as the axis of the economic agenda.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM ESTADÃO · 2 MIN
The National Confederation of Industry (CNI) placed at the center of the economic debate a number that, according to Estadão, reaches R$1.7 trillion per year: the so-called Brazil cost. By presenting proposals to reduce obstacles to competitiveness, the entity tries to transform a set of diffuse problems into a concrete reform agenda.
The central point, according to the report, is that this cost does not appear as a line in the public budget. It spreads through prices, investments that fail to get off the ground and the difficulty that the industry has in competing with foreign products. Therefore, it is an easy cost to underestimate in the day-to-day running of companies.
Estadão lists five components: high taxes, high interest rates, bureaucracy, deficient infrastructure and legal uncertainty. Each one makes production more expensive in its own way, and the effect adds up. The report cites the consequences of higher prices, less space for investment and less job creation.
The CNI's proposal is to treat these obstacles as an axis of the economic debate, and not as a secondary topic. The reform agenda defended by the entity brings together taxation, infrastructure, business financing, professional qualifications and legal security.
From a liberal point of view, the discussion goes beyond industry. Reducing taxes and bureaucracy, making rules predictable and improving infrastructure are measures that, in theory, increase the capacity to produce without depending on more public spending. The question that remains is how each front will be conducted and at what pace.
What changes for the investor
For those who invest in the stock market, dollars and interest rates, the topic is important because the cost of capital and the regulatory environment are part of companies' projections. If part of these reforms advances, the potential effect would be on the margins and investment capacity of companies that depend on production in the country, which could weigh on the reading of industrial sectors. High interest rates, mentioned among the components of the Brazil cost, are precisely the factor that makes financing more expensive. Still, the direction and size of this effect depend on which measures are taken off paper and in what order, and this report does not allow us to anticipate prices or scenarios for assets.
Automatically translated from Portuguese.
