Xinhua News Agency, Sao Paulo, July 24th, title: Brazil’s economy is recovering but still facing challenges
Xinhua News Agency reporter Gong Ruohan
Affected by factors such as the continuous advancement of new crown vaccination and the recovery of the world economy boosting Brazilian exports, Brazil’s various economic indicators performed well in the first half of this year. Institutions and experts generally predict that the Brazilian economy will continue its recovery momentum in the second half of the year, but it still faces challenges such as the uncertainty of the epidemic, rising inflation, and high unemployment.
According to data from the Brazilian Geographical Statistics Bureau, Brazil’s gross domestic product (GDP) increased by 1.2% in the first quarter of this year after a sharp contraction of 4.1% in 2020, and GDP returned to the level of the fourth quarter of 2019.
Analysts believe that Brazil’s economy has performed well this year. In addition to the recovery of economic activities due to the relaxation of anti-epidemic measures, the recovery of the world economy has boosted Brazilian exports and the rise in international commodity prices are also important reasons.
According to data from the Brazilian Ministry of Economy, Brazil’s foreign trade surplus in the first half of this year increased by 68.2% year-on-year, the highest record since the statistics were collected in 1989. The Ministry of Economic Affairs stated that the large increase in the foreign trade surplus benefited from the gradual recovery of the Brazilian economy and the rising demand for international commodities such as grain, oil and iron ore, which pushed up commodity export prices.
The Brazilian government and international organizations generally hold optimistic expectations for Brazil’s economic performance this year. The Brazilian Ministry of Economy recently estimated that Brazil’s economic growth rate this year will be 5.3%. The World Bank predicted in the “Global Economic Outlook” report released in June this year that Brazil’s economy will grow by 4.5% this year.
Nevertheless, analysts generally believe that Brazil’s economic recovery still faces many challenges. First of all, affected by the accelerated spread of the new coronavirus mutant, the trend of the Brazilian epidemic is still facing greater uncertainty. Adolfo Saxida, an official of the Brazilian Ministry of Economy, said that the epidemic has brought uncertainty. If a new wave of epidemic occurs, Brazil’s economic growth expectations may face adjustments.
Second, rising inflationary pressures increase Brazilian economic risks. According to data from the Brazilian Geographical Statistics Bureau, Brazil’s annualized inflation rate reached 8.06% in May this year, which is far higher than the median inflation rate management target of 3.75% set by the Brazilian National Monetary Committee this year.
The high unemployment rate is also worrying. According to data from the Brazilian Geographical Statistics Bureau, the unemployment rate in Brazil rose to 14.7% in the first quarter of this year, and the number of unemployed reached 14.805 million, which is the highest record since the agency started relevant statistics in 2012.
In an interview with Xinhua News Agency, Professor Marco Rosa of the Institute of Economics of Campinas State University in Brazil pointed out that although the Brazilian economy has recovered in the first half of this year, it is not enough to reshape the Brazilian economic structure. Domestic demand is insufficient and growth. Structural problems such as imbalance still exist.
He also said that the Brazilian government will issue emergency subsidies to low-income groups in 2020, which will effectively slow down the momentum of economic recession. This year, the government’s assistance rate has fallen sharply, which may lead to a weakening of economic growth momentum.
(Editor in charge: Ma Changyan)