The growth forecast for the Brazilian economy is 0.6%. The data is from the Organization for Economic Co-operation and Development (OECD) and was published last week. This is less than the growth of the world economy, which is projected at 3%.
According to the data, among the main factors for the slowdown in economic activity in Brazil are the rise in inflation, the War in Ukraine, the slow recovery of the post-pandemic job market and the political uncertainties caused by the October presidential elections.
The study is biannual and serves to review goals and reproject data on the world economy. With the review, the possibility of Brazilian GDP growth decreased in 2022: in December, the forecast was a high of 1.4%. The projection of world GDP also dropped: from 4.5% to 3%.
The main reason, according to data in the report, is the War in Ukraine. And, according to OECD chief economist Laurence Boone, the impacts could be even greater, especially for the poorest countries, as the conflict directly impacts the distribution of food and energy.
The study showed that Brazil has a lower growth outlook than other Latin American countries, such as Colombia (6.1%), Argentina (3.6%) and Mexico (1.9%). With these forecasts, development expectations for the coming year are also limited. The OECD predicts that the country’s economy should grow by just 1.2%.
Between the main reasons for the drop in the forecast is inflation and the current monetary tightening in the country. “Inflation in Brazil remains high in 2023 and should not reach the target on the horizon,” says the OECD report.
Another point that directly affects the economy is, according to the study, that wages are not recovering to the point of compensating for the emergency aid that was in force during the pandemic.
At the same time, while Brazil is experiencing a rise in commodity exports, inflation still directly affects consumption and, as a consequence, the performance of the economy. The elections also set up a scenario of uncertainties, which resulted in a drop in investments in the country until 2023.
Hope in the Brazilian economy
In view of the OECD studies, the growth of the Brazilian economy is increasingly threatened this year and also in 2023. Faced with high inflation, the conflict between Russia and Ukraine, mass unemployment, in addition to the presidential elections in October this year, the Brazilians’ optimism in the improvement of the financial situation is diminishing.
In addition, the Brazilian economy is being considered as one of the slowest growing when it comes to Latin America. But how to change this picture in the coming years? For the OECD, there are some possibilities that Brazil needs to put into practice for the economy to grow, such as:
- The creation of laws to prevent illegal deforestation in order to preserve natural resources;
- Implementation of natural and renewable energies such as wind and solar energy;
- Investment in urban mobility and public transport to facilitate the working category, in addition to reducing air pollution.
The OECD is a forum where governmental debates and analyzes of countries are held, always with a focus on the economy. The report mentioned in this article was the result of a meeting with the members responsible for Brazil’s analysis, which gave rise to resolutions and tips to improve the economy in the coming years.
In order to soften the projections a little, the organization concluded that Brazil needs to transform itself into a more sustainable country. In this sense, the issue that most needs attention today concerns the fight against precarious poverty. The commission emphasizes the need to generate more jobs and financial stability for the population.
Furthermore, it’s necessary to implement new social programs to support the basics for human beings: quality food and access to health resources, energy and employment. Will measures be taken after the official OECD report is released to Brazil?