Reforms ‘paramount’ to Brazil’s Covid-19 recovery

18 Dec 20

Regulatory reforms are needed in Brazil to help with its economic recovery from Covid-19, after the pandemic plunged the nation into a deep recession, the OECD has said.

In its economic survey, the OECD said the Brazil’s GDP will drop by 5% this year, followed by growth of 2.6% and 2.2% over the next two years.

A strong recovery from the recession will require long-lasting improvements in economic policies to help boost employment, productivity and trade, as well as to strengthen public finances, the report said.

Angel Gurría, OECD secretary-general, said: “Brazil was making good progress on structural reforms prior to the pandemic, including its successful 2019 pension reform.

“The shock to the economy and society from Covid-19 makes it paramount to keep momentum going and tackle outstanding barriers to competition, productivity growth and foreign trade, as well as address pressing environmental challenges.”

The OECD said that a package of reforms to improve domestic regulation and competition, reduce trade barriers and improve economic governance, would boost GDP growth by 0.9 percentage points per year over 15 years.

The efficiency of public spending should be improved, the OECD said, as the pandemic is adding to Brazil’s already high public debt, which is currently more than 90% of GDP.

It recommends reviewing tax exemptions and subsidies that account for almost 5% of GDP and reducing civil service costs, which the OECD said would have no impact on wellbeing.

Inequality and poverty have edged up in Brazil over the last few years, since it went into recession in 2017, which the organisation said has reversed progress made since 2000.

The report recommended more targeted support to those in need, including accelerating benefit payments for people who have lost their jobs.

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