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Is Brazil back in business?
January 29, 2018, 11:58 am

Temer is trying to push a package of spending cuts through parliament and other measures to lift Brazil out of its worst recession in decades [Xinhua]

Despite ongoing political turbulence following a slew of corruption charges aimed at sitting and previous leaders and lawmakers, Brazil’s economy appears to have bandaged itself and started to grow again.

Brazilian President Michel Temer is riding the wave of success that his austerity measures and other economic decisions have helped pull the country out of a debilitating -3.3 per cent GDP growth in 2016.

Brazi is now on course to reach at least 2.5 per cent growth in 2018, he says.

In its latest assessment of the Brazilian economy, the International Monetary Fund said that “the economic recovery is gaining strength, spurred by private consumption and investment”.

It listed as a significant positive marker the fall of inflation from two digits to 3 per cent after heavy intervention from the Central Bank.

However, its latest forecast for growth in Brazil is an upward revised 1.9 per cent (from 1.5) in 2018 and 2.1 per cent in 2019.

Brazil’s Finance Minister Henrique Meirelles says he is confident that the IMF will gradually revise its GDP growth forecast for his country to come more in line with what local analysts have predicted.

Temer has used such data to state at the World Economic Forum in Davos that Brazil is back in business.

But the country must overcome ratings downgrades, such as S&P reducing Brazil’s credit rating from BB to BB-, and the unemployment rate.

Both the IMF and the World Bank warn that continued political instability could derail Brazil’s long road back to recovery.

The country will hold general elections next October.

Last week, a court ourdered the seizure of former President Luiz Inacio Lula da Silva’s passport after his corruption conviction on charges of bribery and money laundering was upheld.

Lula had planned to run in the October elections.

The BRICS Post with inputs from Agencies

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