RIO DE JANEIRO – The International Monetary Fund (IMF) on Thursday said that the economic recession in Brazil will soon end, with growth expected to return next year, though still in a low growth rate of 0.5 percent.
Growth will resume gradually in 2017. There are tentative signs that the recession is nearing an end, the IMF said in a statement, stating that it expected a contraction of 3.3 percent this year and 0.5 percent growth in 2017.
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This projection is based on the assumption of fiscal expenditure restriction reform and social security approved within a reasonable period, and the government will meet the fiscal targets proposed for 2016 and 2017, the IMF said.
According to the IMF, if the repair is fulfilled, the uncertainty will decrease and the investment will be recovered, lead back to the beginning of growth at the end of 2016.
However, the agency warned that the growth will be slow due to a faster recovery in economic activity is hampered by the leverage (the ratio of the number of loans and guarantees) company that excess, high unemployment and weak household balance sheets. The IMF expressed its support to the steps taken by the new administration of President Michel Temer, including concessions and privatization program, improving governance for state enterprises, as well as new management at Petrobras.