The Government of Brazil forecasts economic growth of 2.7% from 2020

The Brazilian government predicts that the country's economy will grow 2.7% next year and will maintain a similar pace until 2022, according to a first draft budget for 2020 presented by the Economy Ministry on Monday.

According to the document, the economy of the country, for which an expansion of 2.2% is expected this year, will grow 2.7% in 2020, 2.6% in 2021 and 2.5% in 2022, the last year of the mandate that President Jair Bolsonaro assumed on January 1.

The so-called budget guidelines bill is also optimistic about inflation, which it estimates will remain stable at 3.7% at least until 2022, with a benchmark interest rate of 8% per annum.

The document also establishes for 2020 a forecast of fiscal deficit of 124,100 million reals (about 32,657 million dollars), equivalent to close to 2% of the Gross Domestic Product (GDP).

Although it would be the sixth annual year in which the accounts close in red, the imbalance of 2020 is lower than expected for this year, when the deficit is expected to reach 139,000 million reals (36,580 million dollars).

One of the project's most controversial proposals raises the minimum wage for 2020 to 1,040 reais (today 273.6 dollars), which according to economic analysts will not mean a real increase, because the rise is 4.2%, similar to inflation expected for this year.

Even so, the Secretary of Finance of the Ministry of Economy, Waldery Rodrigues, clarified that the rise in the minimum wage for 2020 can be revised before the end of the year.

"It's just a parameter", which "is not definitive" and may suffer some alteration before December, he explained at a press conference.

The bill, which must be analyzed by Parliament, also keeps the pension system deficit high, which the government intends to eliminate gradually by means of a controversial reform that it processes in the Chamber of Deputies and proposes to replace the current pay-as-you-go system to adopt individual capitalization.

Through the current regime, the State manages workers' contributions in a single fund, while in the system proposed by the Bolsonaro far-right government, retirement will depend on what each person can save throughout their working life.

According to the project presented this Monday, the deficit of the retirement system will be in 2020 of about 237,900 million reals (62,605 million dollars), an amount equivalent to about 3,02% of GDP.


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