Brazil’s Economy Chief Says Depression Looms Without Reforms
Brazil’s Economy Chief Says Depression Looms Without Reforms
(Bloomberg) -- Brazil Economy Minister Paulo Guedes warned the country could fall into a depression if policy makers fail to resume a pro-market reform drive following the coronavirus pandemic.
Guedes said that in the next 60 to 90 days he intends to push for an agenda including infrastructure investments and overhauls of both tax and fiscal rules. The government has spent the last three months combating the effects of the pandemic with aid for informal workers, and now it’s time to focus back on reforms, he added.
“The recession caused by the pandemic can become a depression if we are not careful,” Guedes said in a teleconference on Wednesday.
Brazil’s reform agenda was put on hold when the coronavirus started spreading throughout Latin America’s largest economy earlier this year. As the pandemic stoked unemployment and overburdened hospitals, the government’s efforts shifted from belt-tightening to emergency spending. Guedes said he is counting on lawmakers to get the country back on track by voting on key bills.
Those remarks come less than 24 hours after Guedes said he was optimistic about the economy, and that he hoped “to have a new country in September, October or November.”
The Organisation for Economic Co-operation and Development sees Brazil’s GDP contracting 7.4% this year, though the drop could reach 9.1% if there’s a second wave of the virus as the country reopens. Meanwhile, Brazil’s central bank is expected to cut its interest rate to a record low later on Wednesday to help steady demand.
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