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At a time when the Brazilian economy is not
presenting the satisfactory results it did in the past,
with high unemployment and a severe recession, the
work done by Fundação Getulio Vargas, through its
Brazilian Institute of Economics (IBRE), has become
ever more important.
The Institute analyzes prices collected from
partner companies and transforms them into
agile information of great relevance to the
monitoring of Brazilian inflation. It produces more
than 50 indexes, with national and international
repercussion. IBRE also carries out surveys,
involving monthly questionnaires taken by more
than 7,000 companies and consumers. Their
responses, compiled into monthly indicators,
show the confidence in the Brazilian economy felt
by consumers and various sectors.
In 2016, IBRE launched two new economic
indexes: the Residential Real Estate Market Index
(IGMI-R ABECIP) and the Economic Uncertainty
Indicator for Brazil (IIE-Br).
Produced in partnership with the Brazilian
Association of Real Estate Credit and Savings Entities
(ABECIP), the General Index for the Commercial
Real Estate Market (IGMI-C) arose from the need
for real estate asset price indicators in the country.
Launched in 2011, IGMI-C filled a gap regarding the
profitability of commercial property. IGMI-R ABECIP
now completes this set, by providing information on
the evolution of residential real estate prices, taking
into account real estate bank funding records.
IGMI-R ABECIP uses methodologies adopted by
market specialists inorder to arrive at a value as close
as possible to the reality of real estate transactions.
The information considered in the evaluations is
measurable and verifiable, such as location, size of
property, characteristics of neighborhood, quality of
finishing materials used, and number of bedrooms,
among other aspects that are taken into account in
purchase and sale transactions.
Based on appraisal reports supplied by a large
number of real estate funding agents, the index is
calculated in line with a monthly sample beginning
in January 2014 and updated monthly. The database
compiles information on properties in more than
4,000 municipalities in all Brazilian states, enabling
calculations for the whole country, and separately
for the nine state capitals with the highest density
of information: Sao Paulo, Rio de Janeiro, Belo
Horizonte, Fortaleza, Recife, Curitiba, Porto
Alegre, Salvador, and Goiania. Over time, other
municipalities will gradually be added to the index,
as well as other details, such as different regions of
the main municipalities, and types of properties.
Another important indicator that has recentlybeen
launched and will also contribute considerably to
the Brazilian economy is IIE-Br. This new index
is composed of three measures: IIE-Br-Media,
based on frequency of news reports that mention
uncertainty; IIE-Br-Expectations, constructed from
dispersions of companies’ forecasts for exchange
rates and IPCA; and IIE-Br Market, based on
volatility in the financial markets. These three
measures, taken together, minimize the impacts
that each factor alone could have on the final
indicator. The results of IIE-Br are consolidated by
weighting the three component indicators.
The new indicator is based on studies by Nicholas
Bloom (2013) and the economic concept of
uncertainty discussed by Frank Knight (1921). The
literature in the area warns of difficulties a country
can face when leaving a crisis and resuming growth.
It also notes the need to focus on the main vectors
of economic uncertainty, i.e. political stability and
credible fiscal adjustment in the short term.
Both these newly created indexes will help reinforce
IBRE’s mission, which since 1951 has been to
research, analyze, produce and disseminate high-
quality macroeconomic statistics and applied
economic research, relevant to the improvement
of public policies or private action in the Brazilian
economy, stimulating the country’s economic
development and social well-being.