Brazil’s economy should recover last decade’s level only in 2023 – FecomércioSP

RIO DE JANEIRO, BRAZIL – The São Paulo State Federation of Trade of Goods, Services and Tourism (FecomercioSP) said that the Brazilian economy should recover the level of the beginning of the last decade only in 2023.

In a statement, the organization points out that the 4.1% drop in Gross Domestic Product (GDP) in 2020 is not “the worst news about the Brazilian economic crisis.”

FecomercioSP argues that the last significant growth of the Brazilian GDP occurred in 2013, with a 3% increase. From then on, a sequence of stagnation, drops, and shy rebounds followed – with 0.5% growth in 2014; shrinkage of 3.5% and 3.3% in 2015 and 2016, respectively; and single-digit increases in 2017 (1.3%), 2018 (1.1%), and 2019 (1.1%).

“Given these figures, it is possible to say that the country will only recover the level of the beginning of the past decade in 2023 – if it sustains an annual growth rate of at least 2% until then,” said the organization in a statement.

According to FecomercioSP, the prospect of a rebound in 2023 may not materialize due to the new drop in household consumption, in the context of the pandemic in the country. “In addition, there are still long-term doubts about the federal government’s ability to implement a fiscal austerity policy by cutting expenses,” the federation stated.

According to the organization, even if GDP were to grow between 3% and 3.5% in 2021, it would be more closely linked to the 4.1% drop in 2020 than to a sign of actual economic rebound. “In other words, if nothing goes wrong from now on, Brazil will only return to the 2013 level exactly ten years later. Therefore, it is a true lost decade.”

For FecomercioSP, a “genuine reform of the State” would help the Brazilian economic recovery. “By decreasing taxes, accelerating investments and containing the rise in inflation through a low interest rate policy,” the organization sees a path to a better scenario in the coming years.

Source: InfoMoney

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