Emergency aid inflows in North and Northeast states – 10/17/2020 – Market

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Still in the midst of the Covid-19 pandemic, the most recent data from the Brazilian economy show a heterogeneous recovery not only in sectoral but also regional terms – with emphasis on the effects of emergency aid in the recovery of the North and Northeast.

In the evaluation of economists heard by the leaf, there are clear signs that the aid inflated the economy of these regions in the pandemic, mainly trade, as social isolation measures became more flexible.

The IBGE shows, for example, that in 15 of the 16 states in the North and Northeast trade has exploded and has already surpassed the pre-pandemic level.

Economist Thiago Moraes Moreira, a consultant in planning and a professor at Ibmec’s graduate program, points out that, breaking the country down into two subgroups, it is possible to see that the expansion of retail trade, from April to August, was 51% in the consolidated North and Northeast, but in the Center-South-Southeast it was 27%.

With the exception of Bahia, the northeastern states with industry surveyed by IBGE also registered growth amid the pandemic. The Amazon has already recovered, with surplus, the losses of the period. The same occurred with Pará, Ceará and Pernambuco.

In the other states of the country, a similar recovery was only seen in Minas Gerais and Goiás.

The service sector, on the other hand, continues to struggle to resume the pre-crisis level, plagued by the difficulty of services provided to families. The absence of a vaccine for Covid-19 still limits the movement of people to bars, restaurants, hotels and tourism trips.

Across the country, only the Amazon recovered the level seen before the pandemic. The state had been one of the first to suffer from the coronavirus, with a record number of deaths and becoming one of the
epicenters in the country, with a higher incidence rate of the disease.

Economics professor Luiz Roberto Coelho, from Ufam (Federal University of Amazonas), states that emergency aid was essential in the North and Northeast regions to guarantee the basics for families that did not have a certain job and were left with no option of earnings at the peak of the social isolation.

“With the money in hand, people pay the bills and recover consumption, especially of food,” he says.

But R $ 600 can be a high value for the low standard of living seen in many of these regions. Moreira, from Ibmec, recalls that the 2018 IBGE Synthesis of Social Indicators showed that 41% of the population in the North region lived on less than R $ 420 per month. In the Northeast, this slice represented 44% of the population.

In the rest of the country, there was no more than 16% of those in this income range.

Trends Consultoria points out that the aid had a major impact on these poorer strata. It made the mass of income of northerners and Northeasterners grow at a much faster pace than in other regions. The estimate is that the increase is 16.7% in the North and 13.6% in the Northeast, falling to 2.1% in the South, 2% in the Midwest and 1.8% in the Southeast.

“The total income mass [considerando renda do trabalho, Previdência, transferências e outras rendas] these North and Northeast regions are expected to grow by double digits this year with the injection of aid resources, more than offsetting the loss of the mass of income from work ”, observes Camila Saito, an economist at Trends.

According to the IBGE, this extra income provided by the aid of R $ 600 may have contributed to the growth of sales in commerce. In this case, part of the benefit would have helped families to pay for the purchase of household items and the renovation of the house’s infrastructure with small works, for example.

The perception is reinforced when data on benefit release and performance of the local economy are crossed.

In Amapá, the state that was the most benefited by emergency aid, 71.4% of households received the benefit in August. In the same month, the local retail had a record performance. Sales were 44% higher than in February, the last month before the pandemic took the country to social detachment.

In Maranhão, the second state with the highest percentage of aid, with 65.5% of registered households, trade grew 26.7% between February and August, despite the initial drop in March and April, with the closing of stores, bars and restaurants.

Pará, the third most benefited – 64.5% of households had the benefit -, saw the retail sector overcome losses in the pandemic by 18%.

Economics professor Écio Costa, from UFPE (Federal University of Pernambuco), studied the effect of emergency aid and identified impressive results. Some families who had very low income started to receive up to R $ 1.8 thousand with the benefit, since the woman declared herself head of the house and still had a partner, who also received the R $ 600.

All of a sudden, this made it possible to purchase food, personal hygiene items and construction materials, previously inaccessible, with important impacts on the economy of several cities.

Costa cites Santarém Novo, in Pará as an example. “The owner of a butcher shop in the city opened a pharmacy,
because he made a lot of money selling meat to families that had not consumed beef before. Many of the most humble houses in the municipality have undergone renovations. All of this is the result of assistance, ”he says.

Despite recognizing the social benefits of the program, Otto Nogami, an economist at Insper, asks if there were no problems in the design of the aid, since he generated artificialities in the economy.

“There is a debatable issue: the aid was created to help people without income,” he says. “But we ended up realizing that a large number of beneficiaries used the resource to renovate their homes, exchange electronics, and so on – and this movement caused the trade to recover stronger in some places where this movement may not persist,” he says.

The leaders in unemployment in Brazil, for example, are Bahia and Sergipe, with 19.9% ​​and 19.8% unemployed. In both states, retail has already recovered to its pre-crisis level.

Possible change

For specialists, the picture of strong recovery tends to change with the reduction of the aid to R $ 300, an amount that became effective at the end of September. The first sign appeared in the unemployment rate.

The number of Brazilians looking for a job increased by 700,000 between the third and fourth weeks of September, totaling 14 million unemployed. Growth was driven mainly by the North and Northeast.

The data are from Pnad Covid and were released this Friday (16). Adding rates, there was an increase of 12.3% in the contingent of unemployed in these regions – almost seven times that observed in the South, Southeast and Midwest. Altogether, these three regions registered an increase of 1.8% in the number of unemployed.

In 2021, with the end of transfers, these regions are expected to suffer a significant drop in the total income mass.

“Even considering a Citizen’s Income, these regions must suffer more to regain the mass of income from work, also due to the freeze on the salary of civil servants, considering that the participation of civil servants in the mass of labor income in these regions is greater what
the national average, ”says Saito.

According to the consultancy, Brazilians should close 2020 with a mass of income up 4.5%, but 2021 should be a year of “hangover” with the end of emergency transfers, leading to a drop of 4.3% indicator.

According to Professor Roberto Lopes, from UESB (State University of Southwest Bahia), the increase in unemployment in the Northeast partly reflects the end of the harvest of some products, but also a loss of dynamism with the reduction of aid.

“The poorest are inclined to spend on local commerce. A large share of these resources went to regional products, which help in the local production chain. ”

Eletros, an entity that represents home appliance manufacturers, defends the continuity of emergency aid in 2021 to avoid what it considers a predictable economic and social blow.

“The health and economic crisis does not end on December 31,” says José Jorge do Nascimento Junior, president of Eletros. “We will continue, unfortunately, with the virus circulating in cities, with many cases still at risk of a second wave, as is already happening in Europe.”

Moreira, from Ibmec, reinforces that the government needs to think about alternatives to prevent the end of the aid from deepening inequalities. “Poorer regions will suffer,” he says.

Looking at what occurs at the opposite end of the aid release ranking, it is possible to see the other side of the uneven recovery and its risks. Santa Catarina, which received the fewest benefits in the country, is experiencing a gradual resumption and sustained by more advantageous social premises.

In the state, 90.5% of private sector employees have a formal contract and the informality rate is the lowest in the country, at 25.8%. In the second quarter, it also had the lowest unemployment rate in Brazil: 6.9%, about half the national average, then 13.3%.

Retail sales in August were 16% above February’s level, double the national average, and industry was 9% above. Only services were still 16% below the pre-crisis level. But Paulo Zoldan, an economist at the State Secretariat for Sustainable Economic Development, outlines a positive scenario.

“The hotels are already with a good level of reservation, this should give a boost to the commerce and the accommodation and food sector, which are the most affected in the service account.”

Collaborated Thaís Carrança

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