Brazilian economy is expanding again but long-term challenges remain, says OECD

Brazil has moved up the ranks of the world’s largest economies while making economic growth ever more inclusive. Renewed economic dynamism will allow it to continue converging with more advanced economies and ensuring that disadvantaged groups share in the benefits of future growth, according to the OECD’s latest Economic Survey of Brazil.

The report, presented today in Brasília, points to areas where Brazil can build on past achievements and pave the way for stronger growth in the years to come.

“Brazil is reaping the benefits of years of reforms that have delivered greater economic prosperity and a fairer distribution of the benefits of growth among the population,” OECD Secretary-General Angel Gurría said. “Growth and sensible policies have allowed 40 million people to join the middle class over the last decade. Now the challenge is to create the conditions that will allow further improvements to living standards and sustained reductions in income inequality in a sound macroeconomic environment.”

Brazil’s success has been built on solid fiscal and monetary policy frameworks. To consolidate these achievements, the OECD says it is important that Brazil build on its hard-won reputation by managing the public finances in a clear, predictable and transparent manner. Brazil should also continue to tighten monetary policy as required to bring inflation back to the 4.5% target.

Boosting productivity and the competitiveness of Brazilian firms will increase the size of the economic pie, the Survey says. To do so, Brazil should move forward on much-needed structural reforms, not least to improve infrastructure and the business environment, streamline a burdensome tax system, and open up trade and investment opportunities to provide a level regulatory playing field.

To ensure that the fruits of growth are shared by all Brazilians, the OECD says Brazil should continue to put education and skills at the centre of the fight against inequality and poverty. Scaling up early childhood education, improving the quality of teaching, reducing the number of drop-outs and expanding vocational training can do much to improve the quality of education.

Social policies have also played a key role in reducing poverty and reducing income disparities. Brazil can focus more on programmes that have proven most effective to improve the living conditions of poor people, including through targeted income support, such as Bolsa Família. Improving access and the quality of public services, such as health care and urban transportation, will also have widespread benefits.

The Survey congratulates Brazil on its substantial progress in improving the sustainable use of natural resources. Deforestation has slowed, but large areas of forest are still being destroyed. Strictly enforcing the new forest code will be central to further success in this area.

Brazil’s substantial use of renewable energy sources - notably water power and ethanol - has contributed to a reduction in carbon emissions. To make further progress in this area, domestic fuel prices need to be set in a manner that does not undermine the use of renewable energy sources and is consistent with further reduction in emissions.

Read the report, OECD Economic Survey of Brazil, online, share, link or embed on your website.

Journalists seeking further information should contact the OECD Media Division: news.contact@oecd.org, +33 1 45 24 97 00.

About the OECD: The OECD is a global economic policy forum. It provides analysis and advice to its 34 member governments and other countries worldwide, promoting better policies for better lives.