Brazil Sees Economy Shrinking 0.9% in 2015, Expanding 1.3% in 2016

Brazil Sees Economy Shrinking 0.9% in 2015, Expanding 1.3% in 2016

Guidelines sent to Congress help set goals for following year’s budget bill

By

PAULO TREVISANI And JEFFREY T. LEWIS/WSJ

Updated April 15, 2015 6:23 p.m. ET

BRASÍLIA—Brazil’s economy will contract 0.9% in 2015 and grow 1.3% in 2016, according to forecasts for the country’s 2016 budget proposal, released Wednesday by the planning and budget ministry.

The government sends the guidelines to Brazil’s Congress every year to set goals and priorities for the following year’s budget bill. Budget Minister Nelson Barbosa said at a news conference that the government is working to get the economy growing again.

“Our goal is to get the economy to recover as soon as possible,” Mr. Barbosa said. “We expect recovery to start as soon as in the second half of this year,” he said, adding that the government chose to work with forecasts closer to market predictions.

Mr. Barbosa also announced measures to keep government salaries from rising too much.

The government forecast an inflation rate of 8.2% for 2015, and of 5.6% for next year. The government maintained its target of achieving a primary surplus of 1.2% of gross domestic product this year and of 2% in 2016. The primary surplus is revenue minus noninterest spending, and is a measure of the government’s ability to save.

Brazil’s gross debt will fall to 62.5% of GDP at the end of this year, down from 65.5% of GDP In February, and will decline steadily to 60.4% of GDP by the end of 2018, according to the guidelines. Gross debt includes money owed by state and local governments, as well as the national government.

The country’s nominal deficit, which includes interest payments, will fall to 5.16% of GDP at the end of this year, from 7.34% of GDP in the 12 months through February.

Write to Paulo Trevisani at paulo.trevisani@wsj.com and Jeffrey T. Lewis atjeffrey.lewis@wsj.com