The Organization for Economic Cooperation and Development (OECD) is more optimistic about Brazil now that it was six months ago, according to the group’s latest global economic outlook paper, released Tuesday. The OECD is now forecasting Brazilian GDP growth in 2017 of 0.7%, up from a forecast of 0.6% six months ago, rising to 1.9% in 2018. The OECD’s previous 2018 forecast was 1.6%. For the first time, the OECD also offered a 2019 forecast, predicting a rise in growth to 2.3%. The OECD said growth is being underpinned by low inflation, rising wages and historically low interest rates. Low interest rates, in turn, should help boost investment in 2018 and 2019, helping to meet rising consumer demand without re-igniting inflation. But problems and risks persist. The biggest problem is Brazil’s tendency toward government deficits. Consequently, the OECD lists pension reform as the highest priority for lawmakers in the coming months. The OECD also sees risks to growth in next year’s elections, saying modernizing reforms are needed in the administration taking office at the beginning of 2019.
Link to government news agency release.
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