Brazil: Strong acceleration of growth unlikely – ABN AMRO

Marijke Zewuster, head of emerging markets at ABN AMRO, suggests that unfortunately, approval of the pension reform and lower interest rates of Brazilian economy have increasingly become a necessity to stop a further deterioration of the economy rather than a condition to kickstart it.

Key Quotes

“During the year we have lowered our growth forecast for 2019 several times, from an initial 2.5% at the start of the year to 1% currently. For the moment, we are sticking to our 1% growth forecast for 2019 and 2% for 2020. This means that we expect some growth acceleration in the second half, which will continue in 2020. This acceleration should come from slightly stronger consumption and investment growth, thanks to lower interest rates and some improvement in confidence levels.”

“Still, as long as confidence fails to improve significantly, a more pronounced revival of depressed investments is not expected. Fiscal austerity will continue to hamper a stronger growth recovery, as will structural weaknesses such as low savings, low productivity and inadequate infrastructure. Given a variety of global uncertainties and domestic issues, risks still remain tilted to the downside.”