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TEHRAN, Jul 15 - Political uncertainty over upcoming reform plans in Brazil will continue to cast a shadow over the outlook of Latin America’s biggest economy, a Reuters poll of analysts showed.
TEHRAN, Young Journalists Club (YJC) -Prolongation of the tense climate sparked by an initiative to reform the country’s generous retirement system threatens to keep business confidence and investment subdued next year, economists said.
Brazilian economic growth was seen at 1.0% by the end of 2019, according to the median estimate of 40 analysts polled July 2-11, half the expected rate in April and the third cut to this year’s forecast, in line with other surveys.
The estimate for 2020 dropped to 2.2% from 2.5% in April’s poll, flagging worries about a repeat of recent political friction.
A pension reform bill is moving toward passage in Congress after facing stiff opposition, but President Jair Bolsonaro’s tax reform and privatization ideas may face similar challenges. “Completing the fiscal adjustment should take several years, requiring unremitting commitment,” said Laiz Carvalho, an economist at Santander Brasil.
These proposals will be launched shortly, officials said this month. “Risks refer to the uncertainties of the administration to get support to pass legislation,” said Gustavo Rangel, ING’s chief economist Latam.
“A solid improvement in economic growth will not be seen until the last quarter of 2019, and growth in 2020 could be compromised as well,” said Carvalho.
Companies froze capital spending and hiring plans at the start of the year after debates among lawmakers heated up and protesters took to the streets against the pension overhaul, which aims to save $263 billion in a decade.
Weakness in private consumption arising from high unemployment and a poor export performance added to an investment slump to bring Brazil’s economy near a double-dip recession in the first half.
Source: reuters
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