The Organization for Economic Cooperation and Development (OECD), based in Paris, on Tuesday, reduced its growth forecast for the Brazilian economy, warning of uncertainties about the Reform of Social Security. The entity lowered its expectations of growth for Brazil’s Gross Domestic Product (GDP) from 1.9% to 1.4%, arguing that the climate of political uncertainty about the Social Security Reform vote causes pessimism. According to the OECD, if these doubts are overcome, there will be a reactivation of domestic demand, which could lead to a drop in unemployment.
The organization also warned of a decline in business confidence in the reforms undertaken, along with a reduction in industrial output, which is partly offset by the good performance of the service and primary sectors.
The entity also said that improving public finances is “crucial” to restore confidence since Brazilian public debt reaches 77% of GDP.
By 2020, the OECD forecast is for expansion of 2.3% of the Brazilian economy, slightly below the expectations of the last months of 2.4%.
In the analysis of the world economy, the OECD also reduced the growth forecast from 3.3% to 3.2%. One reason is the commercial war, especially between the United States and China, and the climate of tension.
For Italy, GDP is expected to stagnate in 2019 and grow again modestly in 2020, with 0.6%.