BRASILIA (Reuters) – Brazil’s government on Friday slashed its 2020 economic growth forecast to zero from 2.1% previously, as it factored in the expected huge hit to activity from the global coronavirus outbreak.

It stopped short of forecasting outright contraction this year, however, unlike a growing number of economists now predicting that the coronavirus shock will precipitate one of Brazil’s worst economic crashes on record.

In its latest bi-monthly revenue and expenditure report, the Economy Ministry said growth this year will evaporate, compared with its previous call of 2.1% growth issued only 10 days ago.

The Economy Ministry said it now expects primary revenues this year to be 32.73 billion reais ($6.6 billion) lower than forecast in its last report, and primary expenditures to be 6.33 billion reais greater than previously thought.

This means that if the government is to meet its 2020 primary budget deficit target of 124 billion reais, there may have to be budget freezes of 37.5 billion reais this year.

Brazil’s Senate on Friday approved a presidential decree declaring a national emergency over the coronavirus pandemic, allowing the government to waive fiscal targets and free up budget resources to fight the virus, which has killed seven and infected 621 in the country.

The Economy Ministry’s income and expenditure report also showed that the government reduced its average oil price forecast this year to $41.87 a barrel.

Source: Read Full Article