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Improvement in economic estimates reflects the progress of the reforms

Growth

For Finance Minister Henrique Meirelles, the reform agenda was responsible for creating a more prosperous environment in the economy

With the improvement of the Brazilian economy, the economic team of the Government of Brazil works with an even more positive expectation for the economic scenario. In the face of reforms and improved economic indicators, the estimate is that the Gross Domestic Product (GDP) will advance further in the coming years, with even lower interest rates and inflation.

During an interview on Thursday (14), Finance Minister Henrique Meirelles revised from 0.5% to 1.1% the estimate for GDP in 2017 and rose from 2% to 3% the projection for the next year . According to him, this is a reflection of the recovery that has been occurring in the economy in recent months and that came as a result of economic reforms. 

In addition, the review shows a reflection of the current trajectory and expectation for the Brazilian economy, which, after the hardest recession in history, points to a much more positive horizon. With the improvement in investments and the increase in consumption and confidence, the Brazilian economy has embarked on a recovery route. 

The scenario can be explained by a set of positive factors, as the Minister of Finance pointed out. This is because, in a short period of time - just over a year - Brazil faced a more responsible and accurate economic policy shift, which led to the adoption of structural measures.

Measures such as the limit for public spending, the new regulatory framework for the pre-salt, labor modernization, among others were decisive for creating a positive environment in the economy, generating concrete results. Proof of this is the basic interest rate, which fell to the same extent as inflation.

This scenario was decisive for companies to reduce their indebtedness and to re-invest in Brazil. With falling interest rates and more purchasing power, loans and financing are cheaper for both businesses and the rest of the population. This, in practice, helps keep investments in Brazil and condition growth in the economic sectors. 

Scratchs

However, Meirelles warns that this scenario will be worse if the pension reform is not approved. This is because public accounts would remain disorganized, which would undermine the confidence of investors and entrepreneurs, generating a negative effect across the economy.

In the minutes of the last meeting of the Monetary Policy Committee (Copom), the Central Bank issued an alert in this regard. According to the board of the institution, the completion of the reforms is essential for the economy to consolidate the recovery and for interest rates to continue at positive levels.

Source: Government of Brazil