OECD likes to paint Brazilian economy in dark colors in contrast to Bolsonaro government

RIO DE JANEIRO, BRAZIL – Just in time for the opinion-forming process before the elections, the OECD decided to paint a negative picture of the Brazilian economy.

The Paris-based organization, which Brazil is supposed to join, expects just a modest 0.6% expansion for the current year.

In its OECD Economic Outlook report, the international organization also forecasts GDP growth of 1.2% for the Brazilian economy in 2023.

The OECD’s forecasts for 2022 are more pessimistic than those of the Brazilian government and the financial market, which predict an expansion of 1.5% and 1.2% in 2022, respectively, after growth in 2021 reached 4.6%, the highest in the last 11 years, following a historic decline in 2020 (-3.9%) due to the pandemic.

According to the OECD, high inflation (12% year-on-year), due in part to the war in Ukraine, and the rise in interest rates to their highest level in years (12.75%) have weakened the purchasing power of Brazilians, which is expected to have a strong impact on domestic demand in the first half of 2022.

In addition, according to the OECD, there is the “uncertainty” caused by the presidential elections in October, which will pit leftist former president Luiz Inácio Lula da Silva, considered the favorite in the polls, against the current president and candidate for re-election, conservative Jair Bolsonaro.

The organization also cited what they call a “slow recovery of the labor market” and the decline in Brazilians’ incomes, which are below pre-pandemic levels, as reasons for the weak growth forecast for 2022.

However, the reality is that Brazil’s unemployment rate fell to 10.5% in the quarter ended in April (February, March, and April) 2021, which is the lowest percentage since the quarter of December, January, and February 2016. The unemployed population fell to 11.3 million people.

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