Economic agents reacted with optimism on the first day of President Jair Bolsonaro’s administration. The positive signs of the new management in relation to measures to control public spending and the political movements that may favor the adoption of important reforms, such as the Pension Reform, caused an energetic reaction from the market. The Ibovespa (the benchmark index of the São Paulo Stock Exchange) surpassed the mark of 91,000 points on Wednesday (January 3rd), a historical high.
Economists heard by the Brazilian Government portal assessed that the initial statements by Economy Minister Paulo Guedes and the government team buoyed the financial market, mainly because they reinforced the need for Pension Reform and the adoption of the concessions program. They also said that the political environment is initially favorable to the approval of economic measures by the National Congress.
“There was excitement in the markets because the government endorsed the economic message he defended during the election campaign, that it will adopt an austere stance on spending controls and the issue of concessions. That had a positive impact,” said Austin Ratings chief economist Alex Agostini.
“There is also a positive expectation that the Bolsonaro administration and its economic team can succeed in approving pension reform in the first half of the year,” he said. “The markets have been encouraged by signaling to the government itself that it is on the right track,” he said.
Although pension reform is a controversial issue, analysts have gauged Bolsonaro’s popular support, which may have positive effects on the adoption of the economic agenda. “We say receptiveness not only in the statements by Paulo Guedes [Minister of the Economy], but also from a set of news, such as the possibility of privatizing Eletrobras,” explained Silvio Campos Neto, an economist at Tendências Consultoria.
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