The OECD forecast aggravates the recession in Brazil for political “uncertainty” – Yahoo Finance Spain

The OECD worsened Wednesday its forecast of recession in Brazil because of “deep political divisions”, pushing the prospect of a reversal of the crisis under the government that replaced president Dilma Rousseff, suspended from office.

According to the quarterly report of the Organisation for Economic Co-operation and Development (OECD), Brazil’s GDP will shrink 4.3% this year and 1 , 7% in 2017. in February, the projection was a fall in GDP of 4% in 2016 and zero growth (0%) next year.

“Deep political divisions have reduced the possibilities any noticeable momentum in policy reforms in the short term, “the report said OECD, a club of 34 democracies with open economies and the vast rich majority.

” in our baseline scenario, the political situation remains of great uncertainty during the period of our projections and confidence levels remain low, “he explains the note of the company based in Paris.

These estimates show a sharp contrast to the Focus survey on expectations of market players, published by the central bank of Brazil. In this week’s survey, the average estimate was a recession of 3.81% of GDP this year, with an improvement from -3.89% a month ago, and economic growth of 0.55% in 2017.

in 2015, Brazil’s GDP plunged 3.8%. With the contraction of this year, Latin America’s largest economy faces its worst recession since almost a century ago.

The recession is enhanced with a serious political crisis, which led the Senate to open on May 12 trial Rousseff politician for alleged manipulation of public accounts. The president was suspended from office and replaced by Vice President Michel Temer, who set a priority to restore deteriorating public accounts through strong fiscal adjustment.

But the difficulties accumulate to carry out reforms in many cases require an amendment to the Constitution, in addition rarefied by a storm of allegations of corruption and forced the resignation of two senior ministers of the interim government Temer environment.

the Senate must decide a maximum period of 180 days if Rousseff dismisses. In that case, Temer complete its mandate until the end of 2018.

“The trial of ‘impeachment’ is underway and an interim government has been formed, but political uncertainty and instability seem destined to last “says the OECD.

” at this time, in Brazil politics dominates everything, especially the economy, “he told AFP Jens Arnold, head of the office of the OECD for Brazil and Portugal . “In the new government there are many proposals recommended by the OECD reforms, but the big challenge is to implement them,” he said.

Temer last week gained an important victory, to get Congress to authorize him to increase public expenditure considerably, to give air to a country burdened by a deficit in 2015 reached 1.88% of GDP.

the road continues yet full of obstacles, according to the OECD. “Brazil has the potential to grow, but it needs political consensus” to achieve it and “that is not our baseline scenario,” Arnold said

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