March 16, 2020 / 12:50 AM / 21 days ago

Brazil economy can still grow up to 2.5% this year despite global crisis - Guedes

BRASILIA, March 15 (Reuters) - Brazil’s economy can still grow by as much as 2.5% this year, Economy Minister Paulo Guedes said in an interview published on Sunday, as long as the country does not succumb to a “psychology of failure” amid the global coronavirus crisis.

With the world economy deteriorating at an alarming rate, prompting recession calls from economists and emergency action from many of the world’s major central banks, Guedes said Brazil’s “growth dynamic” will see it hold up well.

“If we give in (to the crisis) and argue amongst ourselves, that will be the psychology of failure. Then the economy will slow down,” Guedes said in an interview with CNN Brasil.

“(But) we have our own growth dynamic and Brazil can reasonably grow 2% or 2.5% with the world falling,” he said in the interview recorded on Friday and broadcast on Sunday.

Brazil’s government lowered its 2020 growth forecast last week to 2.1% from 2.4%. Most private sector economists have reduced their forecasts in recent weeks too, but far more aggressively, with many closer to or even below 1.0%.

Guedes said the government’s financial package to help tackle the spread of coronavirus in Brazil, including 5 billion reais ($1 billion) directly for the ministry of health, is adequate, according to the CNN Brasil interview.

He would be open to increasing that funding, but last week he said the government’s strict fiscal rules, including its spending cap, must be upheld.

Brazil’s stocks and currency have been among the hardest hit of any country’s markets in recent weeks, as investors have moved to price in the economic damage the coronavirus outbreak is likely to wreak on Latin America’s largest economy. (Reporting by Jamei McGeever; Editing by Stephen Coates)

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