Why is Brazil pushing ahead with contentious pension reform?
After the impeachment of Dilma Rousseff, Temer ascended to the presidency promising wide-scale economic reform. Temer has since unveiled a Private Partnership Investment Program (PPI), which seeks to lift Brazil dramatically out of recession. On March 7th, the fiscal plan gained momentum following the unveiling of 55 privatized infrastructure concessions, with investments valued at $14.4 billion. The hope is that a sweeping privatization program will encourage a boom in investment and public spending.
As of yet, Temer’s policies have not resulted in a tangible economic recovery. The release of GDP figures for the last quarter of 2016 shows an economy in disarray, in what has become Brazil’s longest recession. According to the Brazilian national statistics institute (IBGE), the final three months of 2016 experienced a GDP drop of 0.9 percent, marking it the eighth consecutive quarter to registered contraction. For the full year, Brazil contracted a total of 3.6 percent.
Finance Minister Henrique Meirelles, stressed that Q4 2016’s GDP shrinkage was a reflection of Rousseff-era policies, and suggested an optimistic turn-around in 2017. Similarly, Brazil’s central bank predicts growth in both 2017 and 2018, with a GDP expansion of 0.49 percent and 2.39 percent respectively.
Full Content: Global Risk Insight