Brazil saw its growth slow slightly to 1.1% in 2019, the first year of the mandate of far-right president Jair Bolsonaro, after two years at + 1.3%, according to official data released on Wednesday.
In the fourth quarter, gross domestic product (GDP) grew by only 0.5%, against 0.6% in the third, according to figures from the statistical institute IBGE.
“These fourth quarter data mask a sharp slowdown at the end of the year,” said the firm Capital Economics.
And the outlook for 2020 is not optimistic: in January, the government expected growth to 2.4%, but this forecast should be seriously revised downwards due to the impact of the epidemic of new coronavirus on the ‘Mondial economy.
These results are a setback for the government, which in January 2019 expected growth around 2.5% and had raised the euphoria of the markets when he came to power with an ultra-liberal program.
The Minister of Economy Paulo Guedes has implemented an austerity plan and a vast privatization plan to clean up public finances, but these measures have not been enough to get the economy off the ground.
This is the third consecutive year of weak growth, the first economy in Latin America remaining recovering after the historic recession of 2015 (-3.5%) and 2016 (-3.3%).
Pension reform
“These three years of growth have not erased the crisis of 2015 and 2016, we have returned to the level of 2013,” said Rebeca Palis, coordinator of the IBGE, quoted in a press release.
The government had nevertheless achieved a tour de force by having approved in October a pension reform requested by the business community, but this was not enough to restore real confidence to foreign investors.
In November, major oil auctions were snubbed by foreign majors due to transparency issues.
The alarm bell had already been drawn with the results of industrial production, down 1.1% in 2019, after two years of increase.
To revive the economy, the Central Bank lowered its key rate in January to a new historic low (4.25%), and most analysts expect a further reduction at the new meeting of the Monetary Policy Committee (Copom ), half-March.
A reduction motivated in particular by the coronavirus epidemic, which could have a strong impact on the GDP of 2020, affecting in particular the exports of raw materials to China, Brazil’s first trading partner.
ats, awp, afp
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