Brazil will come out of the recession in Q1 2017, says Finance Minister

Finance Minister Henrique Meirelles said on Wednesday (1 February) that the Brazilian economy will begin showing positive GDP growth already in the first half of 2017. While speaking to a group of investors, the minister presented the set of government actions taken to resume economic growth.

“[We must] not only take measures to make Brazil grow again, but also to ensure that it can grow at increasingly higher rates," Meirelles said on Wednesday (1) at the 2017 Latin America Investment Conference, organized by bank Credit Suisse in São Paulo.

Some of the measures presented by the minister include the anticipated payment of R$ 100 billion in loans by the Brazilian Development Bank (BNDES) to the National Treasury, the approved continuation of the Untying of Federal Revenue (DRU) mechanism (which gives the government more discretionary spending power), the approval of the Federal Government Budget for 2017 and, particularly, the approval of the Constitutional Amendment that creates a ceiling for public spending increases.

“The measures are not only being taken, but approved and implemented," said Meirelles. “The spending cap amendment is the first constitutional amendment that alters this trajectory of public spending growth in 28 years, ever since the adoption of the current Constitution," he added.

According to the minister, the approval of the ceiling on public expenditures for the next 20 years means that the size of the Brazilian State as a share of GDP will decrease for the first time in almost 30 years. “It is a structural change in the Brazilian economy, which comes with a constitutional change. There is no controversy. It is historical, and it is already in force”.