In the most critical year of the covid-19 pandemic, 2020, net funding (deposits minus withdrawals) from savings accounts, according to data from the Central Bank, was a record, reaching R$ 166 billion in the year, and for the first time when the final balance of the account exceeded 1 billion R$. This is the result of three main factors. The pandemic has led many consumers to isolate themselves at home, going out less to buy goods and services and resorting to e-commerce, even on a smaller scale. The precautionary effect, which increases savings in conditions of uncertainty about what is to come, was also at work. And then the aid came, which the Government began to pay out, and part of it remained saved in notebooks.
In this context, in 2020 the gross domestic product (GDP) fell by 3.9%. In 2021, it started to recover, with growth of 4.6%, consumers started to return to shopping, and the net savings inflow was negative by R$ 35.5 billion. In 2022, this movement was accentuated, and by August the negative net financing amounted to R$ 85.2 billion, due to the fact that in the same month the final balance fell below R$ 1 trillion – and only did not fall further due to loan income. which the Central Bank does not include in the assessment of net financing. In August, this loan reached a total of R$6.6 billion.
As a result, GDP growth has been expanded and forecasts of its annual growth rate, according to the bulletin concentrationwhich the central bank published weekly with the estimates of financial market analysts, rose from 0.28%, in the first edition in January, to 2.75% in the latest edition in September.
Bolsonaro’s government said that this result comes from its economic and social policies, but it seems to me that the biggest effect came from the population’s return to buying goods and services.
The last expansion of social benefits took place in September, but the mentioned savings data correspond to the period up to August, when recovery is already visible. I also remember that the above-mentioned decline in savings started in 2021, when negative net financing reached the above-mentioned value of R$ 35.5 billion, and I would add that this happened mainly in the second half, already bringing a boost to GDP that consolidated in 2022, with the aforementioned amount of R$ 85.2 billion.
For comparison, according to the website economania.com.br, on July 13, from government sources, the total value of the new benefits – an increase of R$ 200 in Auxílio Brasil, an increase in fuel vouchers, -truck driver , free transport for the elderly over 65 years, subsidy for ethanol production and help for taxi drivers – is estimated at R$ 40.8 billion, and the first mentioned compensation is the largest of them (R$ 26 billion).
However, the question being analyzed cannot stop here, because the question arises whether the savings that took place in the savings accounts are all aimed at consumption, since they can be intended for other investments in fixed income and in variable income. In this regard, my friend and former professor, economist Carlos Antonio Rocca, has been doing a unique analysis of the so-called flow of funds in the economy, that is, where money comes from and where it goes.
Rocca heads the Center for Capital Market Studies (Cemec), affiliated with the Foundation of the Institute for Economic Research (www.cemecfipe.org.br). Note Cemec 05/2022, published in May, deals with the financial savings of the economy in the first quarter of this year. It is evident from it that there was a drop in savings deposits, as already mentioned, in investment funds, in shares and demand deposits, which were intended for the purchase of public debt securities, corporate bonds, longer maturities and larger financing of banks, as which is eg Mortgage Letters of Credit (LCI) and Agribusiness Letters of Credit (LCA).
The final result was negative, a total of R$ 32.4 billion, with an emphasis on savings deposits, which, as already mentioned, had to contribute to GDP growth.
The second quarter report hasn’t been released yet, but Rocca was kind enough to present the data I was interested in, covering the first half as a whole. This time in the mentioned flows, on the outflow side, investment funds stood out the most, with a drop of R$ 109 billion, followed by savings, in the amount of R$ 62 billion; and, on the inflow side, the biggest increase was in bank financing, which increased by R$ 91 billion. I learned that the rise in interest rates is key on the financing side, along with the fact that papers like LCI and LCA are exempt from income tax.
With the half-yearly data, the effect of the drop in savings appears to be smaller, as it amounted to R$ 10.2 billion in the second quarter, which is in contrast to the other values presented. In retrospect, I think the effect of the overall decline on spending increases is clear, but I have more to learn from Professor Rocca, particularly how income increases enter into calculations like the ones shown.
ECONOMIST (UFMG, USP AND HARVARD), HE IS AN ADVISOR FOR ECONOMICS AND HIGHER EDUCATION