Home Administration Growth estimates for GDP 2017 reduced from 1.0 to 0.5 percent

Growth estimates for GDP 2017 reduced from 1.0 to 0.5 percent

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The Ministry of Finance on Wednesday (March 22) revised its projection for Brazil’s GDP growth in 2017  from 1.0 percen to 0.5 percent. Despite the decline in the year as a whole, the estimate for GDP growth in the fourth quarter of 2017 compared to the fourth quarter of 2016 is 2.7%. In the fourth quarter compared to the third, GDP should expand by 3.2% in annualized terms.

In presenting the figures, the Ministry of Finance’s Economic Policy Secretary Fabio Kanczuk explained that the fall in corporate borrowing – or, as economists call it – deleveraging – in the fourth quarter of 2016 was sharper and stronger than expected triggering a change in the pace of economic expansion. Because of this phenomenon, GDP contracted strongly in the period, but this indicates that there will be room for more vigorous growth ahead, he pointed out.

“In the fourth quarter of last year, companies got very much de-leveraged. In paying their debts, they invested little, “he said. “This explains why the fourth quarter of last year presented  significant negative [GDP] figures,” he added. “As deleveraging has lagged behind, now growth is more robust forward.”

Kanczuk added that the GDP 2017 growth estimate of 0.5% of GDP contemplates this change in the pace of recovery since it compares the average quarterly growth this year with last year’s average. “Surprised the speed of deleveraging, and this pulls the average growth down. But I do not see it as bad news, I do not see it as frustration. I see it as something positive. The economy has leveled out and is poised to grow more. ”

According to the secretary, the projected expansion of 2.7% of GDP in the fourth quarter of this year compared to the same period last year, therefore, represents a better measure of the growth environment. “It’s this number that gives the ‘thermal feel’ of how the economy will be at that point,” said the secretary. “It’s a steadily growing economy, despite the 0.5% annual projection,” he added.