WTO Expects Brazil to Register Gradual Economic Recovery

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – A report released on Monday (July 17th) by the World Trade Organization (WTO) says that the Brazilian economy will have a gradual recovery in 2017, but growth will be weak for an extended period of time. The international trade entity is currently reviewing Brazil’s trade policies and practices.

“Despite Brazil’s mainly solid economic fundamentals, downside risks to the economic outlook remain,” says the report issued by the WTO adding, “The economy remains vulnerable to a re-intensification of political uncertainty, as well as to delays in addressing fiscal imbalances.”

According to the international entity ‘future prosperity and sustainable growth depend on the implementation of productivity-enhancing structural reforms in several areas’ “These reforms would increase the resilience of the Brazilian economy, thus enabling it to continue to meet its broad-based economic and welfare objectives, including inclusive growth and a narrower wealth divide,” concludes the report.

The WTO assessment says that Brazil entered a severe recession in 2015 and 2016, triggered by deteriorating trade relations and increased by political uncertainty. The decline in the country’s GDP was accompanied by rising inflation and unemployment.

The WTO report comes days after the International Monetary Fund (IMF), released a document that reiterates the overall international feeling that Brazil’s economic woes may be coming to an end, despite the political turbulence.

“Recent indicators suggest Brazil’s economy is close to a turning point,” says the IMF report released last week. The international organization, however, warns that ‘while the end of the recession appears to be in sight, a recent rise in political uncertainty has cast a shadow over the outlook’.

The report goes on to say that the government’s ability to deliver on social security reform has become more uncertain, and with general elections scheduled for 2018, the opportunity for legislative action is ‘closing’.