Meirelles: Country expected to leave recession in first quarter

Finance Minister Henrique Meirelles said today (Feb. 2) the Brazilian economy should leave the recession in the first quarter of 2017 and that it is expected to report a 2% growth in the fourth semester this year compared to the last three months of 2016.

According to the minister, the government expects the recovery not to be marked by “chicken flight patterns,” with accentuated ups and downs. “[We expect] Brazil to take a path of sustained and sustainable growth over the course of this year, which means we should really rid ourselves once and for all of this chicken flight pattern—Brazil growing for a few years, then falling into recession,” Meirelles said during an event organized by Credit Suisse investment bank, in São Paulo.

In his view, the fiscal adjustment and the reforms being implemented by the government will help the country avert accentuated cycles of economic hikes and drops. “Our growth path must be stable. Economic cycles are normal, they're inevitable, but [we have to] leave this pattern of accentuated cycles of growth and decline. This comes as a result of the evolution in the solution of key problems, the fiscal adjustment,” he argued.

To investors, Meirelles said that the economic recovery can already be noticed, adding that the performance of a number of sectors shows signs that the country is on its way out of the recession. “Automobiles have grown, and also heavy transport, associated with the tolls from heavy transport on highways and light transport. The industrial output grew in December, which means the country already finds itself in the recovery process.”

Inflation

Regarding inflation, Meirelles said he rate tends to fall on the long run as a result of the reforms carried out by the government, which curb fiscal expansion. He highlighted that the Brazilian economic have shown more efficiency and higher productivity rates.

“The issue of legal security in several activities is being addressed, as well also the whole economic efficiency and productivity issue. That is, it all brings the trend to a downward trajectory on the long run for the economy's structural interest and for inflation. There is no doubt that Brazil in on its way towards normality,” he stated.

Translated by Fabrício Ferreira