Itaú BBA - Pension reform moves forward amid global headwinds

Brazil Scenario Review

< Volver

Pension reform moves forward amid global headwinds

junio 14, 2019

We reduced our growth forecasts for 2019 (to 0.8% from 1.0%) and 2020 (to 1.7% from 2.0%), incorporating a sharper deceleration in the global economy.


Please open the attached pdf to read the full report and forecasts.

 

• We reduced our growth forecasts for 2019 (to 0.8% from 1.0%) and 2020 (to 1.7% from 2.0%), incorporating a sharper deceleration in the global economy.

• The pension reform bill may advance more quickly in Congress, now that changes to the proposal have been approved by party leaders and added to the report presented by the rapporteur of the Lower House’s Special Committee. We expect the reform to be approved in the Lower House in July, with a fiscal impact of about 60% of the original proposal. Considering the current slower growth in public revenues, we now anticipate worse results for the primary deficit; our primary deficit estimates have been revised to 0.9% of GDP in 2019 (from 0.8%) and 1.2% of GDP in 2020 (from 1.1%).

• Our year-end exchange rate forecast is unchanged at BRL/USD 3.80 in 2019. However, as the global background becomes more unfavorable, we expect the exchange rate to reach 4.00 in 2020.

• We maintained our estimates for the IPCA consumer price index at 3.6% for both this year and the next.

• Also conditional on the pension reform approval, we now expect a decline in the Selic benchmark interest rate to 5.0% in 2019 and 2020, in response to the slow recovery in economic activity and favorable inflation outlook.

 

Please open the attached pdf to read the full report and forecasts.



< Volver