{
  "title": "Six Charts on Boosting Growth in Brazil",
  "publication": "IMF News, July 25, 2019",
  "sourceUrl": "https://www.imf.org/en/news/articles/2019/07/25/na072519-six-charts-on-boosting-growth-in-brazil",
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  "summary": "Brazil’s economic recovery after the 2015−2016 recession remains sluggish.To boost growth and create more jobs, Brazil needs to pursue pension and tax reforms, trade openness, and investment in infrastructure, the IMF stated in its latest annual economic assessment.",
  "publishDate": "2019-07-25",
  "sections": [
    {
      "heading": "Overview and macro outlook",
      "content": "- Brazil’s economic recovery after the 2015−2016 recession remains sluggish; real per capita growth has fallen by 8 percent since the beginning of the recession in 2014.\n- After the 2015−2016 recession, real GDP grew by only 1.1 percent in 2017 and 2018.\n- Growth is expected to stay subdued at 0.8 percent in 2019.\n- Approval of the pension reform—currently in Brazil’s Congress—and progress in finalizing and implementing the government’s structural reform agenda would boost GDP growth to 2.4 percent in 2020.\n- While the unemployment rate did fall this year, it is still high compared to pre-crisis levels."
    },
    {
      "heading": "Public debt and fiscal sustainability",
      "content": "- Public debt is currently at 88 percent of GDP and is increasing, exposing Brazil to debt sustainability risks.\n- Putting debt on a more sustainable path is critical for economic growth."
    },
    {
      "heading": "Pension reform",
      "content": "- Pension reform, which is underway and currently being discussed by Congress, is a crucial first step to bringing down debt.\n- Spending on pensions and public wages accounts for a large share of total government expenditure.\n- Absent reforms, pension spending is projected to increase substantially, driven by Brazil’s population aging.\n- The current pension system is described as unsustainable and bad for income distribution.\n- The pension reform under Congressional consideration is key to putting debt on a sustainable path."
    },
    {
      "heading": "Tax reform and investment climate",
      "content": "- Brazil has a complex tax system; ICMS (the Tax on Commerce and Services) is important in terms of revenue but is fraught with substantial distortions and exemptions.\n- Given the relatively high tax burden, tax reform should aim at harmonizing the system and reducing costly and distortive tax exemptions while raising the same amount of revenues.\n- Simplifying the tax system would also boost private investment.\n- Revenue-neutral tax reform is high in the government’s priorities and could follow the pension reform."
    },
    {
      "heading": "Trade openness",
      "content": "- Brazil is one of the most closed economies in the world due to both tariff and non-tariff barriers.\n- Opening up to more trade is essential to improve competitiveness and could give a much-needed fillip to investment.\n- The recent European Union-Mercosur trade agreement and efforts to comply with the Organisation for Economic Co-operation and Development liberalization codes provide important opportunities to foster trade integration."
    },
    {
      "heading": "Infrastructure and productivity",
      "content": "- Brazil’s public capital stock and quality of infrastructure are lower than in peer countries because of low public investment—particularly on infrastructure—over the past two decades.\n- Closing the large infrastructure gap would boost productivity.\n- Reducing the infrastructure gap will require public investment funds to be spent more effectively and mobilization of private capital through concessions.\n\nSource: Six Charts on Boosting Growth in Brazil — IMF (https://www.imf.org/en/news/articles/2019/07/25/na072519-six-charts-on-boosting-growth-in-brazil).\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- Read the report\n- Brazil trade blog\n- Brazil and the IMF\n- income distribution\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2019/07/25/na072519-six-charts-on-boosting-growth-in-brazil"
    }
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    "Published: July 25, 2019",
    "Brazil’s economic recovery after the 2015−2016 recession remains sluggish; real per capita growth has fallen by 8 percent since the beginning of the recession in 2014.",
    "After the 2015−2016 recession, real GDP grew by only 1.1 percent in 2017 and 2018.",
    "Growth is expected to stay subdued at 0.8 percent in 2019.",
    "Approval of the pension reform—currently in Brazil’s Congress—and progress in finalizing and implementing the government’s structural reform agenda would boost GDP growth to 2.4 percent in 2020.",
    "While the unemployment rate did fall this year, it is still high compared to pre-crisis levels.",
    "Public debt is currently at 88 percent of GDP and is increasing, exposing Brazil to debt sustainability risks.",
    "Putting debt on a more sustainable path is critical for economic growth.",
    "Pension reform, which is underway and currently being discussed by Congress, is a crucial first step to bringing down debt.",
    "Spending on pensions and public wages accounts for a large share of total government expenditure.",
    "Absent reforms, pension spending is projected to increase substantially, driven by Brazil’s population aging.",
    "The current pension system is described as unsustainable and bad for income distribution.",
    "The pension reform under Congressional consideration is key to putting debt on a sustainable path.",
    "Brazil has a complex tax system; ICMS (the Tax on Commerce and Services) is important in terms of revenue but is fraught with substantial distortions and exemptions.",
    "Given the relatively high tax burden, tax reform should aim at harmonizing the system and reducing costly and distortive tax exemptions while raising the same amount of revenues.",
    "Simplifying the tax system would also boost private investment.",
    "Revenue-neutral tax reform is high in the government’s priorities and could follow the pension reform.",
    "Brazil is one of the most closed economies in the world due to both tariff and non-tariff barriers.",
    "Opening up to more trade is essential to improve competitiveness and could give a much-needed fillip to investment.",
    "The recent European Union-Mercosur trade agreement and efforts to comply with the Organisation for Economic Co-operation and Development liberalization codes provide important opportunities to foster trade integration.",
    "Brazil’s public capital stock and quality of infrastructure are lower than in peer countries because of low public investment—particularly on infrastructure—over the past two decades.",
    "Closing the large infrastructure gap would boost productivity.",
    "Reducing the infrastructure gap will require public investment funds to be spent more effectively and mobilization of private capital through concessions.",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[Read the report](https://www.imf.org/en/Publications/CR/Issues/2019/07/23/Brazil-2019-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-48520)",
    "[Brazil trade blog](https://blogs.imf.org/2019/03/18/chart-of-the-week-trades-impact-on-brazils-industries/)",
    "[Brazil and the IMF](https://www.imf.org/en/Countries/BRA)",
    "[income distribution](https://www.imf.org/en/Publications/Books/Issues/2019/03/11/Brazil-Boom-Bust-and-Road-to-Recovery-44927)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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