Strengthening economic growth

The COVID-19 pandemic has significantly affected wellbeing and prosperity, while also raising inequalities. Improving living standards will require ambitious structural reforms to boost productivity growth. Raising spending efficiency would create fiscal space for growthenhancing policies and more inclusive social protection. The OECD provides thorough economic analysis, policy recommendations and best practice examples to help Brazil realise its full potential.

Brazil has made good progress in recent years to implement growth-enhancing reforms commended by the OECD. Thanks to a successful policy reform that aligned directed lending rates with market rates, financial markets are now undergoing a profound transformation. These developments have facilitated a structural decline in interest rates and reduced financing costs for the economy. Several tariff lines have been reduced unilaterally to foster trade integration. Rules for foreign entry in air transportation and banking, as well as import licensing requirements, have been eased. A major pension reform was passed, which will make the pension system more sustainable and strengthen its redistributive character. Brazil has been included in the major OECD publications related to economic growth:

The OECD Economic Survey of Brazil, published every two years, assesses the major challenges faced by the Brazilian economy and makes concrete policy recommendations to address specific structural issues.

The OECD Economic Outlook analyses twice a year the short-term economic prospects of OECD Members, Key Partners such as Brazil, and other selected non-Members. The publication highlights that Brazil’s recovery has been supported by a rebound in export growth, offsetting the impact of the severe wave of COVID-19 infections. The report also provides forecasts for major macro-economic aggregates, such as GDP growth, inflation, government balance and unemployment.

The annual OECD Going for Growth flagship report identifies structural reform priorities to enhance long-term growth prospects. Since 2011, Brazil is included with other key emerging economies (China, India, Indonesia, Russia and South Africa). Based on a broad set of internationally comparable indicators of structural policies and performance, five priorities are identified for each country with the aim of improving labour productivity and utilisation. Potential effects of the reforms on policy objectives other than GDP growth include reducing inequality, public finance and macroeconomic imbalances.

Finally, a strong, long-lasting and inclusive economic recovery will require further action and long-standing structural challenges to be addressed. These challenges include improving fiscal outcomes, fighting corruption, strengthening social protection, raising productivity and improving education and training policies. Barriers to trade, entrepreneurship and competition are still high compared to the OECD, which reduced Brazilian firms’ incentives to become more productive. Deforestation, a major source of greenhouse gas emissions, has recently rebounded, calling for policies that strengthen the effective protection of natural resources.

www.oecd.org/eco

J Bilateral meeting between SecretaryGeneral Mathias Cormann and Mr Paulo Guedes the Brazilian Economy Minister, at the OECD, 28 March 2022.