Brazil growth forecasts tumble ahead of key pension reform vote

By Jamie McGeever BRASILIA (Reuters) - Economists continue to slash their forecasts for Brazilian economic growth this year, according to a closely watched survey published on Monday, intensifying the spotlight on a key Congressional vote on pension reform later in the week.

Reuters April 23, 2019 00:05:36 IST
Brazil growth forecasts tumble ahead of key pension reform vote

Brazil growth forecasts tumble ahead of key pension reform vote

By Jamie McGeever

BRASILIA (Reuters) - Economists continue to slash their forecasts for Brazilian economic growth this year, according to a closely watched survey published on Monday, intensifying the spotlight on a key Congressional vote on pension reform later in the week.

The central bank's weekly FOCUS survey of nearly 100 financial institutions showed the median forecast for 2019 growth fell sharply in the latest week to 1.71 percent from 1.95 percent a week before.

A drop of virtually one quarter of a percentage point in the space of a week is big, and mirrors the 0.27 percentage point fall to 2.01 percent on March 18 from 2.28 percent, just as political infighting on social security reform began to heat up.

At the start of 2019, the median FOCUS forecast was for 2.55 percent GDP growth this year.

"It's really disappointing, and strengthens the view that interest rates will eventually be cut," said Cleber Aliesse, a derivatives broker at brokerage H.Commcor in Sao Paulo. "The only thing supporting the rates curve and (official) interest rates is uncertainty over fiscal reforms."

The FOCUS survey will make uncomfortable reading for the government, whose social security reform bill faces a crucial hurdle in Congress on Tuesday when the Constitutional and Legal Affairs Committee (CCJ) votes on its constitutionality.

The vote was supposed to take place last week but was delayed after lawmakers, including government allies, demanded more time to discuss some of the bill's more controversial elements.

The government remains optimistic Congress will pass its plan to slash social security spending by 1 trillion reais over the next decade ($255 billion), which it says will restore public finances to health, unleash huge investment into Brazil and pull the economy out of its funk.

With the growth outlook darkening by the week, the need for approval of meaningful reform is growing.

Economists at research consultancy TS Lombard on Monday said sub-par indicators released so far this year suggest the economy may even have contracted in the first quarter, with uncertainty over reforms putting company investment plans on hold.

"In recent months, the lack of progress on structural reforms has eroded confidence for consumers, industry, retail and services," Wilson Ferrarezi, the firm's Brazil economist, wrote a note to clients.

($1 = 3.92 reais)

(Reporting by Jamie McGeever; Editing by Chizu Nomiyama)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

OPEC+ sticks to plan to ease oil output cuts from May 1
Business

OPEC+ sticks to plan to ease oil output cuts from May 1

By Rania El Gamal, Olesya Astakhova and Ahmad Ghaddar DUBAI/MOSCOW/LONDON (Reuters) - OPEC, Russia and their allies will stick to plans for a phased easing of oil production restrictions from May to July amid upbeat forecasts for a recovery in global demand and despite surging coronavirus cases in India, Brazil and Japan. The group known as OPEC+ ditched plans to hold a ministerial meeting on Wednesday, four OPEC+ sources said, following Tuesday's meeting of ministers who are members of a market monitoring panel.

U.S. consumer confidence soars to 14-month high; house prices accelerate
Business

U.S. consumer confidence soars to 14-month high; house prices accelerate

By Lucia Mutikani WASHINGTON (Reuters) - U.S. consumer confidence jumped to a 14-month high in April as increased vaccinations against COVID-19 and additional fiscal stimulus allowed for more services businesses to reopen, boosting demand and hiring by companies. The upbeat survey from the Conference Board on Tuesday, which also showed a strong increase in vacation plans, suggested the economy continued to power ahead early in the second quarter after what appears to have been robust growth in the first three months of the year, believed by many economists to have been the second strongest since 2003.

Musk trolls Bezos as space race between world's richest men heats up
Business

Musk trolls Bezos as space race between world's richest men heats up

(Reuters) - The space race between the world's two richest men went into hyperdrive on Tuesday after Tesla chief Elon Musk took a swipe at Jeff Bezos' attempt to challenge a major NASA contract. The two billionaires, who have been trying to launch long-range orbital rockets, were competing for a coveted contract from the government to build a spaceship to deliver astronauts to the moon as early as 2024. Musk won.