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Brazil growth: Of lost years, lost decades

Frustration is building quickly in Brazil. What was supposed to be the beginning of a credit cycle – and a structural improvement in long-term economic growth – is becoming just another false dawn.


Figures from Brazil’s central bank show a deceleration in credit growth in the second quarter of 2019 (compared with the first quarter), which led an exasperated Octavio de Lazari, president of Bradesco, to say that 2019 is “already another lost year” for the economy.

In a meeting with journalists, Lazari struck a pessimistic note: “The second quarter (credit performance) is worse, reflecting the negative GDP growth in the first months of this year.”

Bradesco had already lowered its forecasts to 1.2% GDP growth for the year due to slower-than-expected economic recuperation caused by the government of new president Jair Bolsonaro and its apparent inability to govern. The lack of progress in pensions reform is the touchstone for economic and financial angst – causing a lack of investment from both international and local investors – but the inability to make necessary macro and micro reforms runs deeper.

It is the striking and uncomfortable reality that real income per capita growth has disappointed during the last four decades (or for two generations now) - Alberto Ramos, Goldman Sachs

Lazari’s clear annoyance with Brasilia may be because he fears more than one lost year (he says that even if pensions reform passes by September, a recovery won’t happen until 2020).

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