Economists continue to slash their forecasts for Brazilian economic growth this year, according to a closely watched survey published on Monday, intensifying the spotlight on a key Congressional vote on pension reform later in the week.
The central bank’s weekly FOCUS survey of nearly 100 financial institutions showed the median forecast for 2019 growth fell sharply in the latest week to 1.71% from 1.95% a week before.
The survey was released a day before the Congressional Constitutional and Legal Affairs Committee (CCJ) is scheduled to vote on the constitutionality of the government’s signature social security reform bill.
The vote was supposed to take place last week but was delayed after lawmakers, including government allies, demanded more time to discuss some of the bill’s more controversial elements.
Labor and Pensions Secretary Rogerio Marinho said on Monday there will be some “minor changes” to the bill but insisted they will not dilute the bill’s targeted savings of 1.1 trillion reais (US$ 280 billion) over the next decade, although he did not give any details on where the changes might be made.
Analysts say pension reform is critical to restoring public finances to health, unleashing huge investment into Brazil and reviving the economy. The latest FOCUS survey highlighted just how critical it is.
A drop of almost one quarter of a percentage point in the space of a week is big, and mirrors the 0.27 percentage point fall to 2.01% on March 18 from 2.28%, just as political infighting on social security reform began to heat up.
At the start of 2019, the median FOCUS forecast for GDP growth this year was 2.55%.