RIO DE JANEIRO, BRAZIL – Brazil’s Economy Ministry sources said the portfolio would raise its growth forecast this year to 2% from 1.5%, a change backed by stronger-than-expected recent economic indicators.
The revision will come out this week and will serve as the basis for calculating government revenues and expenditures in a bimonthly report to be published on July 22; the sources said anonymously as the figures are not public.
In May, the ministry maintained its GDP expectation at 1.5%. However, in late June, Economy Minister Paulo Guedes had already said the economy would expand by around 2% this year, with the structural effect of the government’s economic reforms offsetting the impact of high interest rates.
Private economists surveyed by the Central Bank now see GDP expanding by 1.59% in 2022, a significant change from earlier in the year, when projections hovered around 0.3%, with some even predicting a recession.
Activity has rebounded despite double-digit inflation and monetary policy tightening, considered among the most aggressive among the world’s major economies.
Services activity in Brazil resumed growth in May and at a faster pace than expected, according to official data on Tuesday. Labor market figures also beat expectations, with the unemployment rate falling to single digits for the first time since early 2016.
In addition, the government-backed spending package about to be approved in the Chamber of Deputies should boost consumer demand this year, increasing income transfers to the poorest as President Jair Bolsonaro seeks re-election in October.
With information from Reuters