Since the beginning of Brazilian political and economic crisis in 2014, the country accumulated disturbing results in terms of GDP growth. If, while the commodities boom endured Brazil surfed in splendorous prosperity, arising as a relevant emerging power, when the cycle came to an end, the Brazilian economy entered in its worst negative GDP series since 1930. From 2014 to 2016, the country faced stagnation and then actual recession, going from +0.5% in the onset of the crisis, dropping to -3.8% in 2015 and -3.6% in 2016. 

However, after last year’s presidential exchange and the passing of austerity reforms headed by Mr. Michel Temer, the President of Brazil, the country’s economy finally seems to be back on track.

In an official pronouncement in August, the president of Brazilian Central Bank, Mr. Ilan Goldfajn, affirmed the government is now working with an official forecast for GDP growth of 2.0% by 2018. The economic recovery is noticeable, and can be perceived by the increase of consumption levels registered in the first two quarters of 2017, as well as the consecutive cuts in basic interest rates driven by favorable regression in inflation index, which retrieved to pre-crisis levels.

Nevertheless, the Temer administration still faces tough challenges: unemployment is still high and corruption charges against the President may pose difficulties in approving unpopular, yet necessary, reforms.

But, despite political instability, Brazil can finally say goodbye to recession and prepare its ground for a more sustainable growth through the next decade.

 

Source: Brazil Central Bank