successful field

successful field

Despite the huge gaps in economic policy, some sectors of the economy are showing signs of great dynamism. These include agribusiness, oil, iron ore and renewable energy.

As far as the government’s blunders are concerned, it doesn’t need much demonstration. Minister of Economics, Paulo Guedes, admits that he cannot bring his projects to the ground. The holes in the public accounts are not widened as a result of inflation, which increases the prices at which taxes are calculated and artificially increases revenue. Unemployment affects about 11% of the active population… In short, there is no shortage of trouble.

But, just as Brazil has become a reference in vaccination against COVID-19, despite President Jair Bolsonaro’s denial, there are regions that are doing very well and are more promising.

in February, United States Department of Agriculture (USDA) released a report in which it predicts Soybean exports increase by 46 percent by Brazil, up from the current 93 million tonnes to 136.1 million in the 2031/32 harvest. The development of the use of technologies should lead to an increase in productivity. And, when new stretches of rail and road networks are available, the cost of transporting grain should come down.

Oil is another plaque. The Energy Research Company (EPE) forecasts that national production will increase by 54% over ten years to 5.17 million barrels per day in 2031. But the good perspective runs the risk of being disappointed when political pressure dominates Petrobras.

And at a time of rising consumption of other metals produced by Brazil, such as aluminum and nickel, there has been a boom in iron ore production, which will be in high demand in the energy transition. Brazil exported 357.3 million tonnes of iron ore in 2021 for US$44.6 billion.

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Another important segment is the generation of renewable electricity, mainly from solar and wind sources. Installed solar power capacity has increased from 1.1 gigawatts (GW) in 2017 to 15 GW so far. and wind, up from 13 GW to 21.05 GW in 2017. Just to give an idea of ​​the proportion, the largest hydroelectric power plant in the US, Itaipu, has a capacity of 14 GW.

If the government doesn’t get in the way, the day will soon come when Brazil will be able to use this energy to generate the long-awaited fuel of the future, green hydrogen.

These successful examples are at risk and have a certain threshold. The risk is that the big eye that spends could kill the cash cow. This would be enough to suffocate for additional taxation. The limitation lies in the fact that agriculture, mining and sustainable energy production account for a relatively small share of GDP.

*Celso Ming is an economy commentator

About the author: Sarah Gracie

"Proud social media buff. Unapologetic web scholar. Internet guru. Lifelong music junkie. Travel specialist."

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