Brazil Economy to Grow in Q1

Brazil’s economy will post growth of between 0.7% and 0.8% in the first quarter, turning the corner on a two-year recession, Finance Minister Henrique Meirelles said. In an interview with GloboNews cable channel, Meirelles said Brazilian companies will have to start to restock inventories and draw up investment plans, MacroPress reported.

Latin America’s largest economy shrank 0.9% in the last three months of 2016, its eighth straight quarter of retreat. Unemployment has hit a record 13.7% with more than 14 million Brazilians looking for work. In the last two years the economy contracted 3.6% and 3.9%. Meirelles said the reform of Brazil’s costly social security system, the main cause of a gaping budget deficit, is crucial to restore growth and create jobs despite its unpopularity.

The changes to the pension system, which will extend the years Brazilians must work to retire on full benefits, are opposed by 71% of those surveyed by pollster Datafolha. The reform proposal by President Michel Temer is scheduled to face a key vote in committee, before it is put to a floor vote in the lower house of Congress next week. The Brazilian economy performance has been strongly boosted by the agriculture sector, which is expected to harvest record crops.

Meanwhile, the government is trying to secure a “safe margin” of votes in favor of its proposal to overhaul the country’s costly social security system, Meirelles told journalists on Monday after a Victory Day parade. A vote in the full house planned for this week has been put back to allow the government coalition to muster the 308 votes needed. Pension reform is a contentious issue in Brazil, which has one of the world’s most generous social security systems, allowing retirement on average

at the age of 54 with almost full benefits, compared with 72 years in Mexico.