The OECD believes that the Brazilian economy will grow in 2018. Photo: Rodrigo Czekalski/DAF
brazilian economy recovery gdp growth

The OECD believes that the Brazilian economy will grow in 2018. Photo: Rodrigo Czekalski/DAF

Brazil is set to pull out of the most severe recession in its history, according to global growth projections from the Organization for Economic Cooperation and Development (OECD). While the country’s government was quick to announce its first quarter of growth since 2013 in June this year, global economists are now also recognizing the recession’s end.

The OECD predicted that Brazil’s GDP growth would remain at 0.7 percent for the remainder of 2017, but projected it would rise between 1.6 and 1.9 percent in 2018. The economy is expected to grow further in 2019 by an estimated 2.3 percent. The projected figures are a striking contrast to 2016, when the Brazilian economy shrank by 3.6 percent over the course of the year.

</p> <p>Although growth will be sensitive to political developments, the OECD’s new report states that unemployment is showing its first signs of decline. Additionally, the organization points out that inflation is currently below the 4.5 percent target, and could lead to intensified economic <a href="https://brasil.elpais.com/brasil/2017/09/01/economia/1504265708_449648.html">growth</a> for Brazil in the coming year through lower interest rates and better chances for investment recovery. However, the organization’s report also strongly emphasizes that controversial welfare reforms must proceed for growth and economic recovery to continue.</p> <p>While the OECD points out that credit for businesses has yet to pick up, new research from the Getulio Vargas Foundation (<a href="https://brazilian.report/2017/11/23/brazils-congress-temer-lula-prison/">FGV</a>) points to further economic hope for Brazil. FGV’s most recent survey shows that consumer confidence has reached its highest level since October 2014, rising by 3.1 points to 86.8 points. This is an increase of 8.9 points in comparison to the same period from the previous calendar.</p> <p>The survey saw the Current Situation Index (ISA) increase for the fourth consecutive month, registering a 1.3 point growth in November and bringing the total score to 74.5 points. This is the highest ISA score since June 2015, indicating optimism among consumers for Brazil’s current economic scenario. Consumers also expressed hope for the near future via FGV’s Expectations Index (IE), which also rose to the index’s highest since April 2014 (99.6 points) and scored 96.0 points.</p> <p>Furthermore, Brazilians reported improved perceptions of family finances, with consumer satisfaction rising by 1.9 points to a total of 69. Optimism for the future is also echoed here, increasing by 1 point to 93 points. This is the most hopeful Brazilians have been about family finances since October 2014, when consumer optimism amounted to 96.4 points.</p> <p>Brazilians also expressed intentions to buy durable goods, reaching its highest level since November 2014 despite five months of consecutive decline. November 2017’s indicator grew by 11.1 points, bringing the total score to 82.4. It remained just a few points shy of the score obtained three years earlier (87.2).</p> <p>Overall, FGV found that confidence increased among three of the four income brackets surveyed in November 2017. Expectations for improvements in the near future boosted confidence in families with an income of more than 9,600 BRL per month, where the study recorded the highest increases in confidence. Confidence among families earning between 2,100 BRL and 4,800 BRL per month declined by 0.6 points, however this was the only group that dropped.</p> <p>These follow other positive developments for the Brazilian economy, including a note from the Central Bank observing that the country’s economic activity index had risen more than expected in September. Overall, both Brazilian and international economic bodies are anticipating a gradual economic recovery based on current trends.

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MoneyNov 29, 2017

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