BRASILIA, DF (FOLHAPRESS) – In an attempt to show that the country’s economy is doing well, the Secom government of the Presidency of the Republic. Although it presented on its social networks a cutout of the GDP (Gross Domestic Product) which is not used by IBGE.
The strategy is questioned by experts. The Presidency states that private GDP grew by 2.75%, while public GDP fell by 2.25%.
The publication, which cites the Ministry of Economy as a source, states that in the model adopted by President Jair Bolsonaro (no party), the State ceases to be the protagonist and gives space to private initiative.
This week, the IBGE released the GDP results for last year, which increased by 1.1%. The data was lower than initially projected by the market and the government and consolidated 2019 as the third consecutive year of weak economic growth.
The Secom publication states that the result “is below the level of lies told by those who root against Brazil” and that the decline in public GDP is “good for Brazil”.
According to USP (University of São Paulo) Economics professor Laura Carvalho, the calculations made by the government are not recognized by the IBGE and are not made by other statistical agencies in the world. “This violates the basic principles of the GDP concept, which requires that the economy be treated as a whole,” she said.
The economist claims that the bill is ideological
This separation creates distortions, according to her, because goods produced by the government are often consumed by families. Products from companies are also used by the government, such as in the purchase of medicines by the SUS, for example.
Another problem, according to the researcher, would be the fact that the government's calculation includes investments by state-owned companies in the private sector account.
The professor also questions the government's argument that private growth is replacing the public sector.
“It’s not that there was a better allocation of resources. It’s simply that the government has fewer resources and is investing less, spending less on infrastructure. That’s not something to celebrate,” he said.
Resources to invest
The calculation was also criticized by FGV economist and former Secretary of Economic Policy Manoel Carlos Pires. For him, the division between public and private GDP makes no sense.
“These things are not separable in these terms. When the government uses resources to invest, in general, the one who produces the capital goods or does the construction is the private sector, which is hired to produce this type of good or service. For this reason, this approach is wrong. There is no such thing as government GDP,” he stated in an article analyzing the SPE study.
Economist and professor at the University of Brasília (Unb) Roberto Ellery, who worked with Bolsonaro's economic team, is also critical of the model. In an article, he states that it is not new that government consumption grows less than household consumption and investment.
In a historical analysis, the economist states that of the last 23 years, 15 have seen lower growth in government consumption compared to household consumption.
In addition to questioning methodological points of the calculation, he highlights that the current government's efforts to make reforms are not yet felt in the accounts.
“The fruits of this effort will still take a while to appear. I understand that there is a temptation to show results, but we must be careful,” he says.
On Twitter, the Secretary of Economic Policy, Adolfo Sachsida, responded to the criticism by stating that presentations from other administrations of the ministry and also from the Central Bank used the concept of private GDP.
“An exercise done by the ministry”
The executive director of IFI (Independent Fiscal Institution), Felipe Salto, says he does not see the calculation as a major problem, considering that it is “an exercise carried out by the ministry”.
Especially after the release of the 2019 GDP, Minister Paulo Guedes (Economy) stated that the result was expected and that activity is accelerating. He highlighted that the economy's performance has been gradually improving throughout last year.
Guedes' subordinate, Treasury Secretary Mansueto Almeida, used a less optimistic tone and stated that last year's growth was very low, is not normal and causes frustration in society and the presidency.
However, on Wednesday (4), Bolsonaro mocked the result by asking a comedian to answer questions from the press about the GDP.
The next day, he complained about the fact that the press had published that he had made a joke about the data.
Therefore, the president stated that he had heard from businesspeople that Brazil is doing well.
However, the investment data includes the public and private sectors; the ministry uses projections from researchers and data from the Treasury to estimate what portion of this account is under the government's responsibility.
Although Secom used the data after the release of the GDP for the full year of 2019. Therefore, the Ministry of Economy reported that the basis of the information is a note produced in January.
According to the document, the SPE compares the third quarter of last year with the same period in 2018 to reach the increase of 2.75% in private GDP and the decline of 2.25% in public GDP.
In short, the results, when four quarters are accumulated, are more modest, with 1.81% of private GDP growth and 1.11% of public GDP decline.