BRASILIA: Brazil is emerging from its long recession and is headed for solid growth in 2018 and 2019 as recent structural reforms start to bear fruit, but the country still has some way to go.
The mixed outlook comes in the latest OECD Economic Survey of Brazil which notes that sustaining this recovery, unleashing Brazil’s full economic potential and spreading the benefits fairly will require additional efforts to rein in public spending, increase trade and investment, and further focus social spending on those most in need.
“Brazil is back on a positive growth path, but there is no time for complacency,” said OECD Secretary-General Angel Gurría. “With the demographic dividend now over, getting the economy fully back up to speed will require greater investment, higher productivity and closer integration into the global economy. For this, Brazil needs to continue on the path of active structural reform to ensure the sustainability of its fiscal accounts and the inclusiveness of its growth.”
A major challenge is said to be sustaining inclusive growth because Brazil is still one of the countries with the highest levels of inequality in the world. The richest half of the population earns 90 percent of total household incomes, while the bottom half earns only 10 percent. Severe inequalities continue to hit women, racial minorities and youths hardest.
Reversing this trend will require concrete actions to improve infrastructure planning, open up new sources of finance, reduce administrative burdens, simplify taxes and streamline licensing.
Continuing to fight corruption with reforms to increase accountability would also help to draw investment and restore citizens’ trust in institutions. “The pervasive dimensions of corrupt practices exposed by recent allegations have also revealed significant challenges in economic governance which require action,” said Gurría.
These events also show the steady strengthening of Brazil’s institutions. Its independent judiciary has not shied away from pursuing senior figures. By continuing to strengthen its institutional framework Brazil can distance itself from the past and reduce future vulnerabilities as well as strengthen inclusive growth.