Brazil estimated to grow in 2017 and 2018

The Institute for Applied Economic Research (IPEA), a Brazilian study center linked to the government, estimates a 0.7% hike in the gross domestic product (GDP) in 2017, and 2.6% in 2018.

Agriculture and livestock were the biggest highlight in the first half-year, IPEA Director for Macroeconomic Policies José Ronaldo de Castro reported. Industry and services are expected to exert a heavier influence on the country's economic recovery as of the third quarter this year.

“We believe there has been a cyclical reversion and we have left the recession,” said Castro, who forecasts a gradual recovery.

IPEA reduced the projected increase for 2018, which stood at 3.4% in the study released in March. The pension reform was expected to be approved by Congress in the middle of the year, Castro said, which did not happen.

“Making public spending more sustainable is crucial to making investors have confidence in the economic recovery and make long-term investments, especially in infrastructure,” he said, adding that states and municipalities also have to address fiscal issues to ensure growth is recovered.

Estimates for 2017 and 2018 include a 0.5% and 3.4% expansion in the GDP, with services up 0.1% and 2.2% respectively. Agriculture and livestock should rise 12.5% this year and 3.5% next year.

Translated by Fabrício Ferreira