Brazil Officially Coming Out of Recession: Economy Minister

RIO DE JANEIRO, BRAZIL – Brazil is officially coming out of the recession, Minister of Economy Paulo Guedes said yesterday, November 13th, at the 39th Foreign Trade National Meeting (ENAEX). “Today we received the news that Brazil is officially coming out of the recession,” Guedes said.

He noted that his “working assumption” is that contamination by the novel coronavirus is declining and that the “vaccine is coming”. “Brazil is succeeding in fighting the disease. This is a fact occurring on the health side. On the economic side, it is a fact that Brazil is coming out of the recession,” he stressed.

According to the Minister, the government has approximately one and a half years to convert the economic rebound into sustainable growth. “Instead of a consumption wave, in a strong cyclical rebound, the challenge is to convert it into an expansion of productive capacity.”

The Central Bank’s seasonally adjusted Economic Activity Index (IBC-Br), released on Friday, showed growth of 9.47 percent in Q3 this year compared to Q2. In September, compared to August, there was growth of 1.29 percent.

Compared to last year’s Q3, however, there was a three percent decline. In the 12 months to September, there was a contraction of 3.32 percent.

Jobs

Guedes said Brazil has opened a net 300,000 jobs in September. According to the Minister, “the pace is so strong that it may be difficult to sustain” job creation at this level.

The Minister noted that in past crisis years, job losses had been higher than in the current one. This year, up to September, 550,000 jobs were lost compared to 650,000 in the 2015 recession (January to September) and 687,000 in the same period in 2016. “The mistakes of economic policy have caused more damage than the pandemic,” he said.

Spending cap

The Minister of Economy once again advocated control of public accounts, through the spending cap. “We are not going to raise taxes, so we need spending control,” he said.

According to Guedes, the spending cap is a “barrier against irresponsibility with public finances”. “It is important that we try to maintain this cap to change the direction of the Brazilian economy that was based on government-led investments.”

Guedes also pointed out that civil servants “patriotically accepted” the wage freeze this year and in 2021 as a contribution to tackling the pandemic. “Salaries were far higher than the private sector average, and civil servants, because there were no major complaints, patriotically accepted this contribution of not asking for an increase during this year of pandemic and next year, when we will still have a devastating impact on public finances,” he said.

Source: Agência Brasil

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