MercoPress. South Atlantic News Agency

Guedes: Brazil's GDP to beat most optimistic projections

Guedes claimed an adjustment to the income tax would allow subsidies to become permanent

Brazilian Economy Minister Paulo Guedes said Monday that his country's Gross Domestic Product (GDP) would outpace the most optimistic projections by the end of 2022.

 Guedes explained that the index measuring all the wealth produced in terms of goods and services would be around 3% or probably higher. “Of course, we will grow more,” he stressed.

He also admitted to having “discussed this possibility” Monday “with the Central Bank.”

According to the Brazilian Institute of Geography and Statistics (IBGE), the GDP grew 1.2% in the second quarter and 2.5% in the first six months of the year. Economic activity is 3% above the level before the covid-19 pandemic.

Guedes made those remarks during an event organized by the United Brazil Institute in São Paulo and also pointed out that Brazil's economy will continue to generate employment and income.

The minister also criticized forecasts in the opposite sense, saying they were based on “the old model,” while the administration of President Jair Bolsonaro has replaced the old state interventionist model.

Guedes also went over his planned Income Tax reform to keep the Brazil Aid R$ 600 (US$ 115.4) subsidy a steady feature for impoverished Brazilians. The idea was also included in the 2023 Budget bill submitted by the Planalto Palace before Congress.

“How are you going to defend that we are a very important country, that we have to take away the subsidy? Then you say: 'put your hand in your pocket, pay 3% tax'. And they answer: 'I don't want to. You can't. This is a morally incorrect attitude. We lose credibility, strength, the respect of the population if we don't pay tax on profits and dividends,” Guedes stressed.

According to the minister, only a tax reform can make the adjustment of the Brazil Aid permanent. He said that the eventual decree of a state of calamity because of the prolonged war in Ukraine would be an idea, but this option would be temporary and not quite a good alternative. (Source: Agencia Brasil)