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Brazil’s Biggest Economic Risk Is Complacency

Summary:
This year can be a decisive one for Brazil’s transition to a more robust and sustainable growth path – but only if the government commits to fiscal and structural reform. If Brazil’s leaders fail to take this opportunity to lay the foundations for long-term prosperity, it may not be long before the economy stalls again. WASHINGTON, DC – Brazil’s economy has endured a difficult few years: after a deep recession in 2015-2016, GDP grew by just over 1% annually in 2017-2019. But things are finally looking up, with the International Monetary Fund forecasting a 2.2-2.3% growth in 2020-21. The challenge now is to convert this cyclical recovery into a robust long-term expansion. Britain Enters the Unknown

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This year can be a decisive one for Brazil’s transition to a more robust and sustainable growth path – but only if the government commits to fiscal and structural reform. If Brazil’s leaders fail to take this opportunity to lay the foundations for long-term prosperity, it may not be long before the economy stalls again.

WASHINGTON, DC – Brazil’s economy has endured a difficult few years: after a deep recession in 2015-2016, GDP grew by just over 1% annually in 2017-2019. But things are finally looking up, with the International Monetary Fund forecasting a 2.2-2.3% growth in 2020-21. The challenge now is to convert this cyclical recovery into a robust long-term expansion.

Two problems have undermined Brazil’s economic dynamism: anemic productivity and a bloated public sector. As weak productivity growth has constrained the economy’s overall growth potential, steadily rising public spending has become increasingly unsustainable.

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Otaviano Canuto
Mr. Otaviano Canuto currently holds the position of Executive Director at the Executive Board of Directors of the World Bank Group and its Affiliates, the same position he held when he was Executive Director of the World Bank from 2004-2007. He represents Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Philippines, Suriname, and Trinidad & Tobago. He is also a member of both the Committee on Development Effectiveness (CODE) and the Budget Committee.

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