Haddad predicts 3% economic growth this year, but 3rd quarter worries

Minister Fernando Haddad, of Finance, celebrated this Friday (1st) the growth of 0.9% of the Brazilian GDP (Gross Domestic Product) in the second quarter of the year announced earlier by the IBGE, the Brazilian Institute of Geography and Statistics. The result was higher than expected by the market and driven mainly by the industry (0.9%) and services (0.6%) sectors.

GDP growth in the second quarter of the year adds up to 3.7% in the first half, which should offset a deceleration already predicted by the economic team in the third quarter of the year, according to the minister.

“The third quarter is kind of key for our future projections, [sendo que] August is better than July, but it hasn’t closed yet [a apuração do] month. But, as I already said weeks ago, we are concerned about the activity in the third quarter”, said the minister after a meeting in São Paulo at the ministry’s local office.

According to him, the concern with the third quarter is also due to the performance of the economy in July, which had a loss of revenue. “It was a problem located in some companies that collected little income tax, we want to understand why”, he said.

Haddad sees that the second quarter “came strong” and should guarantee growth “around 3%, it could be 2.9% or 3.1%”, but that the economic team is looking carefully at the results that will be determined on the third quarter to take whatever measures are necessary “to not let a possible slowdown in the economy affect the results of this year and next year”.

He pointed out that market projections were that GDP growth in the year would not reach even 1%, while the ministry was working with something around 2%. Haddad said that he hopes that Congress will approve the economic measures sent by the ministry to balance the public accounts and that, in parallel, will help in the resumption of growth.

A little earlier, the Secretary of the National Treasury, Rogério Ceron, stated that the BRL 35.9 billion shortfall in public accounts – the second worst in the historical series – is within expectations and that there is no change in the targets set for the year.

“We have to approve the measures that were addressed [ao Congresso], we have an improvement in the political environment for these measures to be considered cautiously and generously. Brazil needs to take measures that promote a rebalancing of accounts, but at the same time, we have to leverage the country’s economic growth”, said the minister.

Also according to Fernando Haddad, the measures sent to Congress are reasonable and correct distortions that occurred in the past. However, projects such as the taxation of offshore and closed-end funds are generating discussions even before they are effectively processed in parliament.