What to Expect in 2022

SÃO PAULO – The document “Brazilian Economy: 2021-2022,” by the National Confederation of Industry (CNI), predicts a growth of 1.2% for Brazil’s economy in 2022, but with a caveat: for this modest number to be achieved, some conjunctural problems such as inflation, employment, and the normalization of global value chains need to be overcome from the second half of 2022. In other words, it is crucial to reduce the so-called “Brazil cost,” an expression that defines a set of structural, bureaucratic, labor, and economic difficulties that hinder the country’s growth, negatively influencing the business environment, increasing the prices of domestic products and logistics costs, compromising investments, and contributing to an excessive tax burden. The estimate is that the Brazil cost takes away R$ 1.5 trillion annually from companies operating in the country, representing 20.5% of the Gross Domestic Product (GDP). To overcome these enormous obstacles, the CNI advocates for the approval by Congress of PEC 110, which proposes a tax reform that will eliminate distortions and simplify taxation on consumption. At the same time, it warns of the need to allocate high resources to infrastructure, emphasizing that with competitive costs, the country may attract investments from companies looking to diversify their supplier networks. If none of this happens, CNI’s forecast for GDP expansion in 2022 drops to 0.3%. The expectation is that in the second half of 2022, when the recovery of services is close to pre-pandemic levels, industrial activity will be more heated. In the long term, it is expected that the major projects planned for the modernization and expansion of national infrastructure will be carried out. Among these major projects is the construction of a tunnel for the dry connection between the municipalities of Santos and Guarujá, in the state of São Paulo, a promise that has begun to exceed a century without coming to fruition. The forecast is that the bidding process will be launched in the third quarter of 2022, with an auction scheduled for the fourth quarter of 2022. The tunnel will have a total length of 1,500 meters, with the submerged part measuring 800 meters. The implementation is estimated to cost R$ 4 billion. The project envisions flows of light and heavy vehicles; pedestrians, bicycles, and the light rail vehicle (VLT). According to the government, the objectives of the project include increased safety for vessel traffic operations, urban and operational mobility between the shores of the port of Santos, and a reduction in navigation interferences in the port channel. The Ministry of Infrastructure (Minfra) foresees that a terminal at the port of Rio Grande-RS for the handling and storage of bulk vegetal solids, requiring investments of R$ 41.2 million, should go to auction in 2022. A terminal at the port of Paranaguá-PR, intended for bulk solid minerals, with an estimated investment of R$ 172.5 million, is also expected to go to auction. A bulk terminal in São Francisco do Sul-SC has also entered the Investment Partnership Program (PPI) portfolio of Minfra, with plans to inject R$ 60 million into the area. The PPI also approved the reissuance of the São Gonçalo do Amarante airport, located in Rio Grande do Norte, with plans to hold the auction in the first quarter of 2022 and estimated investments of R$ 308.9 million. Finally, the PPI endorsed the reissuance of the Fluminense Expressway (BR-101/RJ). Obviously, the allocation of resources for the modernization and expansion of infrastructure will have little impact on GDP performance in 2022 in practice, except that the start of these major projects will serve as a stimulus for those sectors of the private sector that are currently hesitant to increase their investments in the country.

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Liana Lourenço Martinelli, lawyer, postgraduate in Business Management and International Trade, is Manager of Institutional Relations at the Fiorde Group, composed of Fiorde International Logistics, FTA Transport and General Warehouses, and Barter International Trade. Email: fiorde@fiorde.com.br. Website: fiorde.com.br

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