UBS BB improves Brazilian GDP projection to 3% in 2024 (Image: Rmcarvalho/Getty Images)
O UBS BB raised the projection for Gross Domestic Product (GDP) Brazilian from 2.8% to 3% at the end of 2024. For 2025 and 2026, the bank maintained estimates of 1.5% and 2%, respectively.
Economists Alexandre de Azara, Fabio Ramos and Rodrigo Martins state that the country's growth has exceeded expectations due, in part, to past reforms, specifically labor and social security reforms.
Another portion of the expansion in consumption above 2.0% to 2.5% per year is linked to the increase in spending growth beyond the target, court orders, favorable harvests and the delaying effects of monetary easing after the pandemic, specifically in 2021 and 2022.
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“Looking to the future, we still think that the federal government will be challenged to deliver a primary budget close to zero”, they say.
UBS estimates that next year's “clean” budget results will likely be close to a 1% deficit. “By 'clean', we mean the results before the expenditure exclusions permitted by law (mainly court orders and emergency disbursements)”, they clarify.
“All of this will likely happen amid high interest rates and debt refinancing costs. Public debt is now 79% of GDP vs. 58% in August 2007, and we predict another increase of 3 ppt by 2026”, they state.