December 17, 2019 / 3:21 PM / a month ago

Optimistic Brazil industry sees economy growing 2.5% in 2020

BRASILIA (Reuters) - Pension reform and low interest rates have paved the road for recovery of the Brazilian economy that will expand 2.5% next year, driven by industrial investment and renewed construction, the CNI industrial lobby said on Tuesday.

The group urged the government and Congress to speed up reform of the country’s arcane tax system as “indispensable” for continued recovery.

The lobby’s projection of 2.8% growth in industrial output is a rosier picture than estimated by most economists.

The central bank’s weekly Focus survey of economists cut its industrial production forecast for next year to 2.02% from 2.20% on Monday. The survey did raise GDP growth expected in 2020 by 0.01% to 2.25%.

The CNI said pension reform and record low interest rates have created confidence and it forecast investment in the industrial sector will grow by 6.5% next year.

The construction sector will be the main engine of growth in 2020, it said.

“We are into a period of liberalizing structural reforms. We will surely see more and better growth in 2020,” CNI president Robson Andrade said.

But delays in tax reform, which President Jair Bolsonaro’s government has yet to propose to Congress and will not be done this year, could created uncertainty and inhibit investment, the CNI warned.

Reporting by Anthony Boadle; Editing by Alistair Bell

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