Brazil’s 2024 growth seen at 3.6%, says finance minister

2:14 pm Tuesday, January 07th, 2025

By Marcela Ayres

BRASILIA (Reuters) -Brazil’s Finance Minister Fernando Haddad said on Tuesday that the country’s economic growth likely hit 3.6% in 2024, while the primary deficit for the year is expected to have reached 0.1% of gross domestic product (GDP).

This means the government of leftist President Luiz Inacio Lula da Silva probably met its goal of eliminating the primary deficit, excluding interest payments, as the target allows for a tolerance margin of 0.25% of GDP, or a deficit of up to 28.8 billion reais.

Speaking in an interview with TV channel GloboNews, Haddad said his goal was to leave the economy “in better shape than I received,” which would involve controlling spending “in the right way, without harming low-income workers.”

Haddad emphasized the need for the government to improve its communication at a time when global markets remain highly “sensitive.”

He said that the external environment is more challenging and the entire world is concerned about how the U.S. economy will be managed, with news on this front having a quick and significant impact on asset prices.

After a long-anticipated package of spending cuts disappointed markets late last year, further weakening the country’s currency, Haddad said the inclusion of income tax exemptions in the announcement may have contributed to the backlash, as well as the delayed disclosure of the measures.

Nevertheless, he called the reaction of the Brazilian real “exaggerated” and expressed confidence that the foreign exchange rate would eventually “accommodate.”

Last year, the currency slumped 27% against the U.S. dollar, one of the worst performances among emerging markets, weighing on inflation expectations and contributing to the tightening of monetary policy, now under the leadership of governor Gabriel Galipolo, appointed by Lula and a former deputy at the Finance Ministry.

Haddad said that the government will not always agree with the central bank’s diagnosis but emphasized that each has its role, reiterating that Lula has already highlighted his commitment to respecting policymakers’ decisions.

(Reporting by Marcela Ayres; Editing by Gabriel Araujo and Aurora Ellis)