WEDNESDAY, MAY 14, 2014
BRASILIA–Known for his rosy view of the economy, Brazil’s Finance Minister Guido Mantega said Wednesday that government forecasts may sometimes be doctored a bit.
“Our forecasts are strictly technical,” he said during a lengthy testimony to lawmakers. “But sometimes we have to push the envelope a little bit.”
Mr. Mantega has said that Brazil will grow 2.3% this year. That is a slow pace comparing to 2010’s 7.5%, but many critics doubt it is attainable now. Around 100 economists surveyed by the central bank have produced a median forecast of 1.7% growth in gross domestic product in 2014.
The low expectations reflect what critics define as a government failure to spur investment while keeping its social policies. In the past decade, income-distribution programs helped millions of Brazilians to become avid consumers, but the country’s productive sector didn’t keep up with the new demand, critics say.
The imbalance fueled inflation, which now stands at 6.3% annual rate, above the official target of 4.5%. Higher borrowing costs followed, and the basic interest rate is now 11%. Economists say that this curbs economic growth.
But Mr. Mantega refused to join the naysayers. He said that sometimes forecasts are made a little higher “to establish sort of a target…You have to encourage the team,” he said after four hours being grilled by lawmakers.
He also said that payroll-tax cuts in the past year are moving companies to increase investment, and that a pipeline of concessions to be auctioned to the private sector will also have that effect.