Dr Nasser Afify

The Economic Reform in Brazil Dr Nasser Afify

Brazil is the world's eighth largest economy. After almost a decade of strong growth (2002-2013), Brazil entered into the worst recession in its history in 2015 (-3.8% of GDP) and 2016 (-3.6%). This economic crisis was due to the fall of commodity prices and a drop in consumption and in investment. However, the economy recovered in 2017 and the GDP recorded a 1% progression. Budgetary adjustment and favorable economic conditions have fostered the recovery. In 2018, the Brazilian economy confirmed its rebound and the country's GDP grew 1.4%. The economy is expected to keep growing in 2019, reaching an estimated annual GDP growth rate of 2.4% (IMF). In 2018, inflation grew slightly, reaching 3.7% (compared to 3.4% the previous year) and is expected to increase to 4.2% in 2019. Fiscal consolidation is the government's main objective, but even though the fiscal deficit is expected to narrow in 2019, the President's promise to reduce the imbalance to zero this year is not feasible. The government budget balance registered in 2018 a deficit of 7.3% which is expected to be maintained at the similar level in 2019 and 2020. The government will also focus on social security reform, which was announced by the previous administration but failed to pass the Congress. If the current government fails to address the pension system reform, it could jeopardize the stronger economic momentum. However, the Congress is still far from passing the reform plans. The investigation of the Operation "Car Wash", following the worldwide corruption scandal involving Petrobras (the national oil company) has led to the conviction of several members of the Workers' Party (PT) and the impeachment of the then president Dilma Rousseff in 2016, replaced by Michel Temer.