Expert predicts growth in the Goiás economy this year.

Goiás 247 - Even in the face of a national recession, the economy of Goiás is expected to repeat the performance of previous years and register above-average growth in 2015. This forecast was presented on Wednesday by the chief economist of Banco Itaú, Ilan Goldfajn, during a luncheon with business leaders at the headquarters of the Federation of Industries of the State of Goiás (Fieg).

The expert announced that, despite the trend of the country's Gross Domestic Product (GDP) closing the year at -1%, the results of the local agribusiness and energy sectors place Goiás in a more comfortable situation than the rest of the country.

“The economy of Goiás cannot remain completely isolated from what is happening in the country. Brazil is in a difficult period of recession. Of course, there is an influence in this sense. But when we look ahead, we can see the economy of Goiás growing faster than the rest of the country, driven by the growth of agribusiness, which will continue to be strong, and other investments in the energy sector, especially renewables,” he observed during the event held by the Goiás Business Leaders Group (Lide).

Goldfajn highlighted that the outlook for the national economy should improve somewhat starting in the second half of 2015, reflecting the economic adjustments being implemented by Finance Minister Joaquim Levy. “The drop in economic activity recorded in the first quarter of this year should not be repeated. We will have a second quarter that is still bad, but not as bad as the first. This first half of the year will affect 2015 as a whole. GDP should be around -1% or -1,5%. The measures taken by the minister (Joaquim Levy) will only take effect from the second half of the year onwards,” he said.

Governor Marconi Perillo reiterated his support for the adjustments promoted by the Minister of Finance as a way to resume the country's economic growth cycle, during his opening speech at the Lide Goiás event. “The State of Goiás has presented figures above the Brazilian average in GDP, exports, and employment, but we are not an island. We have already suffered the effects of the recession. I am certain that Minister Levy's leadership will certainly shorten the distance that separates us from recession and the return of this cycle of development, job creation, and prosperity,” he stated.

At the regular meeting of the National Council of Finance Policy (Confaz), held in Goiânia between the 9th and 10th of this month, the governor revealed to finance secretaries from across the country and to the economic team of the federal government that Minister Joaquim Levy and his team had his confidence in defining strategies to resolve the country's economic situation and in guaranteeing the continuation of tax incentives. "We trust in the minister's leadership. We need to deepen the adjustments so that the Brazilian economy returns to a virtuous cycle of development," he declared to those present.

Moderate growth

The Itaú economist also highlighted that the economic recovery from the second half of the year will be moderate. According to him, the adjustments made by the Ministry of Finance will be sufficient to gradually curb the slowdown. “The scenario of contraction we had in the first quarter will not be altered. The adjustments will promote a slight recovery in consumption and investment. But it will not be a vigorous recovery like before. It will be slow. Next year (2016) will be better than this year, but it will not be a major recovery,” he said.

For him, the adjustments are repairs that recover important aspects of the economy. However, economic recovery would only come with reforms. “Reforms, such as tax reform, are what would leverage growth through increased productivity. But it's difficult to imagine implementing the adjustments and the reforms at the same time. The adjustments have their effect. As the worst-case scenario recedes, the more depreciated prices should once again attract interest in investing in Brazil,” he predicts.

According to the economist, the current crisis is the result of a combination of the end of the global cycle of accelerated growth and domestic issues. “The slowdown here is more intense than in the rest of the continent. We are in a period of adjustments, intense and difficult to implement, but necessary to restore confidence. Unemployment, which reached a lower level in 2014 (around 5%), should rise and reach 7,3% next year,” he indicated.