Fiscal consolidation

Brazil: recovery prospects remain in place, despite weaker growth at the beginning of 2019

Growth recovery is slowing down in Brazil. The deceleration in the world economy, as well as slow and limited progress in the local adoption of economic reforms –particularly in the social security- will limit the economy’s capacity for growth in the coming years. We expect GDP to grow 1.8% in both 2019 and 2020.

The next government is expected to propose measures to tackle the fiscal imbroglio and other problems, but there are doubts about its capacity to implement reforms given the fragmentation of Congress and political polarization. All in all, the economy is likely to grow around 2% in the coming years.

Average growth in Latin America has been hindered in 2018 (0.9%) by the recession in Argentina, although it will recover in 2019 (1.8%) and 2020 (2.6%). The region presents highly diverse economic perspectives, with crisis in Argentina, uncertainty in Brazil and resilience in the Pacific Alliance.

Growth prospects deteriorate due to the financial volatility, the negative effects of exchange rate depreciation, doubts about whether the next government will face fiscal problems and the consequences of the recent truckers’ strike, among other factors. Thus the recovery process will be more gradual than expected

In the current climate of global financial volatility, it is wise to send signals of fiscal responsibility. The government is committed to fiscal consolidation with a primary surplus of 0.2% of GDP in 2017, the first primary surplus since 2008

Durante la actual crisis económica se ha producido un deterioro sin precedentes del saldo presupuestario de las AA.PP. en España.