Gov’t revises down its GDP forecast

The 2019 economic growth forecast from Brazil’s Ministry of Economy narrowed from 1.6% to 0.8%.

Agência Brasil

Brasília – The Brazilian Ministry of Economy released its Macro Fiscal bulletin this Friday (12). Inflation is expected to keep sliding before ending the year at 3.8%, in line with the government’s target and down from the prior 4.1% forecast. Gross Domestic Product (GDP) is seen going up 0.8%, down from the previous 1.6% projection. In 2020, GDP is expected to widen by 2.2%.

The new forecast matches the latest one issued by the Central Bank and falls slightly short of the 0.82% prediction based on a poll of financial institutions and made public in the Focus Bulletin last Monday (8).

The Macro Fiscal bulletin shows that economic recovery remained sluggish throughout Q2 2019. The passing of the social security reform is mentioned as crucial to the resumption of economic growth.

Special secretary for Finance Waldery Rodrigues believes new retirement rules, coupled with a Tax Reform, can spur GDP growth in years to come. “These two [reforms] comprise measures which impact what we call the potential GDP of Brazil’s economy,” he said.

The Ministry of Economy’s undersecretary for Economic Policy Adolfo Sachsida said the challenges to economic growth include boosting productivity. “Either Brazil embraces pro-market reforms that will stimulate production and employment or weak economic growth will persist.”

*With information from the ANBA Newsroom. Translated by Gabriel Pomerancblum

Lucio Tavora/AFP

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