The last two semesters were marked by uncertainty related to the election of Jair Bolsonaro, seen as the best option to get the country out of the crisis inherited from previous governments. This caused the business confidence index to show a significant improvement, rising from 53,7 points in October-18 to 63,2 points in November of the same year. With Bolsonaro's election confirmed, this level of confidence remained until February 2019, when discussions about the proposed and necessary reforms intensified.
From March onwards, however, with the first signs of government weakness appearing, the index fell again, reaching 56,5 points, but began to grow timidly again in June, with a small increase of 0,4 points. In this context, the first half of the year proved to be more turbulent than expected, with Brazilian GDP undergoing several downward revisions and showing problems for the performance of industry.
Despite these setbacks, inflation is expected to remain under control over the coming months, with interest rates falling to stimulate the economy, and with the dollar rate reaching R$3,9000, even with projections of very low GDP growth.
Plastic resins
The plastic resins market has also been facing downward price pressures since the beginning of 2019, both domestically and internationally. On the international scene, factors related to the oil chain, such as naphtha, have a direct impact on the sector's prices, which are already falling due to the trade war between China and the United States. Increased production and stocks in the United States, falling consumption in China, and greater expectations related to electric cars and alternative energy sources are the main reasons for the lower prices.
On the other hand, the production cuts made by OPEC in an attempt to reverse the situation are not having the expected impact. The weak results are the result of increased production in countries outside the organization. This causes a mismatch between supply and demand for some resins, such as polyethylene, and also for the drop in dollar prices that has been occurring for some years on the international market.
In Brazil, Braskem has great influence as the main supplier of plastic resins to the domestic market and holds a large share of this market. Despite this, the company operates attentively to international prices in order to remain competitive in the face of imported resins.
For the second half of the year, the uncertainties in the national economy do not contribute to a more positive result. Consecutive drops in the GDP forecast and political uncertainties are harming the market and consumer confidence. Despite this, a positive change is expected in the Brazilian and global economic scenario by the end of 2019, with an expectation of price increases during this period.
With a political and economic scenario marked by abrupt changes. Trade conflicts, the possibility of a global recession and an internal scenario marked by uncertainty, the purchasing sector needs to understand what will impact it in the coming months. With this in mind, COSTDRIVERS has prepared a report that outlines the panorama of the global and Brazilian economies. Download your complimentary copy of the to be prepared for these new challenges.
