BCN-05 Brazil hopes $11.2 billion stimulus spurs economy

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ZCZC

BCN-05

BRAZIL-ECONOMY

Brazil hopes $11.2 billion stimulus spurs economy

BRASILIA, July 25, 2019 (BSS/AFP) – Brazil hopes to inject $11.2 billion
into its slowing economy after announcing a plan Wednesday to put some extra
cash in the pockets of workers.

Workers will be allowed to withdraw up to 500 reais ($133) this year and a
certain percentage in 2020 from a severance fund that employers are required
to pay into.

Normally, employees can only touch the money if they lose their job, buy a
home or retire.

Some cash will also be released from a social security fund.

Announcing the “emergency” measure, President Jair Bolsonaro said Latin
America’s biggest economy was “not doing well.”

The extra money would help some 63 million people with “debts and overdue
water, electricity and gas bills,” said Bolsonaro, who came to power in
January on a promise to fix the economy.

Brazilian media estimated 96 million workers would benefit.

The stimulus is expected to add 2.5 percentage points to GDP per capita
over 10 years as well as create three million jobs.

A recent survey showed 35 percent of Rio de Janeiro workers planned to use
the money to reduce debts.

Not everyone welcomed the government’s gesture, however, with some taking
to Twitter to mock the small amount on offer.

Brazil is teetering on the edge of recession as it struggles to recover
from the devastating 2015-2016 crisis that saw the economy shrink nearly
seven percent.

The economy contracted 0.2 percent in the first quarter of 2019 and
economists expect growth of less than one percent for the full year.

Around 13 million people are unemployed and record numbers are giving up
looking for work.

It is the second time in as many years that Brazil has invited workers to
take money out of the reserve, known as FGTS.

BSS/AFP/HR/1015