Economic Growth Projections in Brazil

By Marcela Ayres

BRASILIA (Reuters) – Brazil’s Finance Minister Fernando Haddad indicated on Tuesday that the country’s economic growth is projected to reach 3.6% in 2024. The primary deficit for the year is expected to be 0.1% of gross domestic product (GDP).

This suggests that the government of leftist President Luiz Inacio Lula da Silva likely achieved its goal of eliminating the primary deficit, excluding interest payments. The target provides a tolerance margin of 0.25% of GDP, equating to a deficit of up to 28.8 billion reais.

In an interview with GloboNews, Haddad expressed his aim to leave the economy “in better shape than I received,” which involves managing spending effectively without jeopardizing low-income workers.

Haddad underscored the importance of enhancing government communication, particularly as global markets remain highly sensitive.

He noted that the external environment presents challenges, with global concerns about the management of the U.S. economy, which can swiftly influence asset prices.

After disappointing market reactions to a long-anticipated spending cut package late last year, which weakened the country’s currency, Haddad mentioned that including income tax exemptions might have contributed to the backlash, along with the delayed announcement of these measures.

Nonetheless, he deemed the response of the Brazilian real as exaggerated and expressed confidence that the foreign exchange rate would stabilize in time.

The currency dropped 27% against the U.S. dollar last year, among the worst performances in emerging markets, affecting inflation expectations and monetary policy tightening under Governor Gabriel Galipolo, recently appointed by Lula and a former deputy at the Finance Ministry.

Haddad reiterated that while the government may not always agree with the central bank’s assessments, both entities have distinct roles, and Lula is committed to respecting policymakers’ decisions.