Brazil Economy Minister eyes 5% GDP growth this year, budget surplus in 2023

RIO DE JANEIRO, BRAZIL – (REUTERS) Brazil’s economy may grow by as much 5% this year, Economy Minister Paulo Guedes said on Tuesday, May 225, adding that the government could eliminate its budget deficit and swing to surplus as early as 2023.

In an event hosted by bank BTG Pactual, Guedes struck a characteristically bullish tone, insisting that strong formal job growth, an expected acceleration in Covid-19 vaccinations and resumption of economic reforms in Congress, will turn the cyclical economic rebound into sustainable growth.

“That is the big challenge ahead, and Brazil is showing that it will get there … growing 4.5% to 5% this year,” Guedes said.

The government’s official growth forecast for this year is 3.5%, but a string of upbeat economic indicators has recently prompted many private sector economists to raise their outlooks to 4% and higher.

Guedes said Brazil is close to creating 1 million formal jobs this year and on track to hitting the 2 million mark fairly quickly.

Just as formal jobs growth has reached record levels in recent months, so too has federal tax revenue. At the current pace of inflows into government coffers, Brazil’s primary budget deficit could swing to surplus as early as 2023, Guedes said.

“Our previous calculations were that we would only generate a surplus in 2027. That has already shifted to 2024, and at the pace tax revenues are coming in it may be even earlier, in 2023,” he said.

Guedes stressed that the government will spend whatever it takes to tackle the public health crisis caused by Covid-19, but insisted it will pay all its bills.

He also said the government is studying a negative income tax, and is putting together a package of measures to tackle unemployment. Official figures later this week are expected to show that the official unemployment rate hit a new high of 14.7% in the three months to March. (Reporting by Jamie McGeever and Gabriel Ponte; Editing by Leslie Adler and Sam Holmes)