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03/08/2017 - 18:00hs

ECLAC keeps growth forecast for Brazil unchanged

A report made available by the UN's body shows a growth estimate of 0.4% for the Brazilian GDP and of 1.1% for the economy of Latin America, after two consecutive years of decline.

São Paulo – After two consecutive years of decline, the Brazilian Gross Domestic Product (GDP) should return to positive results in 2017, according to a forecast by the Economic Commission for Latin America and the Caribbean (ECLAC). The United Nation’s commission made available this Thursday (3) a report on the region that shows a forecast that signals a growth of 0.4% for Brazil’s economy this year. The commission kept unchanged a preliminary estimate made public in December 2016.

The Brazilian positive result follows the region’s average, which, according to ECLAC’s projections, should grow 1.1% this year, driven by the improvement in the price of input exported by the region’s countries and by the international scenario, which, despite, the geopolitical risks, shows an improvement regarding growth estimates. In December of last year, the commission put out a forecast that signaled a 1.3% growth for Latin America in 2017.

The report by the commission points out that growth dynamics, as in years past, will be different among the countries and sub-regions. With the exception of Venezuela, which is expected to have a decline of 7.2% in its GDP, and Saint Lucia and Suriname, which are expected to have a decline of 0.2% in their economies, all of the region’s countries should end 2017 with positive growth rates.

However, ECLAC is expecting better numbers from the economies of Mexico and Central America, which could grow 2.5% on average, while the GDP of Latin America is expected to grow 0.6%. According to the commission, the improvement in income via remittances and in expectations regarding growth in the United States, Central America’s main trade partner, should drive up the numbers.

In the report, the UN’s commission highlighted the importance of adopting macroeconomic policies to boost long-term growth and improve to reach the needed structural change of the region’s economy. According to ECLAC, when searching for a balance in the courses of debt and public spending, “it should not restrict public investment.” To make this process easier, according to the commission, one alternative is to separate investment spending from current spending.

To ECLAC, it’s also important to increase public revenues, via changes in tax law system. This could be reached, according to ECLAC, with the creation of more direct taxes (those paid directly to the government, instead of ones imposed indirectly over the consumption of goods and services), the strengthening of government and the reduction of tax evasion.

*Translated by Sérgio Kakitani

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