reigniting inclusive-growth-oecd-economic-survey-brazil-2015
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www.oecd.org/eco/surveys/economic-survey-brazil.htm
OECD
OECD Economics
2015 OECD ECONOMIC SURVEY OF BRAZIL
Reigniting inclusive growth
Brasília, 4 November 2015
2
Poverty and inequality have declined
Poverty and Gini coefficient1995-2013
Source: IBGE; World Bank.
0
5
10
15
20
25
30
0.46
0.48
0.5
0.52
0.54
0.56
0.58
0.6
Absolute poverty (below USD 2 per day, left scale)Gini Index (right scale)
3
Health outcomes have improved
Life expectancy at birth
Source: OECD Health Statistics 2015, http://dx.doi.org/10.1787/health-data-en.
JPN
ESP
CHE
ITA
FRA
KOR
CAN
GBR DE
U
PRT
OEC
D
CRI
CHL
USA
POL
TUR
CHN
COL
BRAZ
IL
MEX ID
N
RUS
IND
ZAF
40
50
60
70
80
902013 1970
Years
4
Productivity has been weak
Labour productivity, 2000=100
Source: Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2013), “The Next Generation of the Penn World Table” available fordownload at www.ggdc.net/pwt.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201180
100
120
140
160
180
200
220
240
BRAZIL China India Mexico South Africa
Thousands of USD / person employed, at purchasing power parities
5
The economy is in recession
Quarterly GDP growth at seasonally-adjusted annual rates
Source: OECD Economic Outlook Database.
-8
-6
-4
-2
0
2
4
6
8
6
The currency has depreciated
Source : Central Bank.
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0
20
40
60
80
100
120
140
160
180
200
USD/BRL exchange rate (left scale)
Real effective exchange rate (right scale)
7
Policies to restore confidence
8
The fiscal position has deteriorated
Primary expenditures and tax revenues
Source: Central Bank; National Treasury.
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 201625
27
29
31
33
35
37
25
27
29
31
33
35
37
Tax revenues (% of GDP)
9
Gross debt is rising
Possible debt trajectories
Source: OECD calculations.
Implement the fiscal adjustment in line with medium term objectives, including to stabilise gross debt
Gradually raise the retirement age and index pensions to consumer prices rather than the minimum wage
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20250
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
Current plans with primary results of 0.15% (2015), 0.7% (2016), 1.3% (2017) and 2.0% thereafterScenario with primary surplus of 3% after 2018Scenario with continuing transfers to public banks of 1.9% of GDP
% of GDP % of GDP
10
Inflation is high
Source : Central Bank.
0
2
4
6
8
10
12
Headline inflation YoY Core inflation YoY
Inflation target
Tolerance band
Establish fixed-term appointments for the Central Bank governor and the members of the Monetary Policy Committee
11
The efficiency of monetary policy could be improved
Monetary policy rate and directed lending rate
Source: Central Bank.
Adjust the directed lending rate in line with the monetary policy rate
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
2
4
6
8
10
12
14
16
18
20
0
2
4
6
8
10
12
14
16
18
20
Directed lending rate (TJLP) Monetary policy rate (Selic)
12
Policies to boost industrial performance
13
Labour productivity in manufacturing is lowID
NCO
LEC
UBR
AZIL
THA
VEN
HRV
MEX ES
TCH
LM
YS TUR
HUN
ZAF
POL
PRT
HKG
SVK
CZE
SVN
GRC
ARG
ITA
NZL
AUS
FRA
KOR
DEU
GBR JP
NSG
PIS
LAU
TDN
KBE
LFI
NNO
RNL
DUS
ASW
ECH
E
0
20
40
60
80
100
120
140
160
180
0
20
40
60
80
100
120
140
160
180in thousands of 2005 USD per employee
14
Tax compliance costs are high
Hours required to prepare taxes For a benchmark manufacturing company, 2014
Source: World Bank.
Consolidate indirect taxes into a value added tax with a broad base
LUX
CHE
IRL
EST
NOR
FIN
AUS
GBR
SWE
NLD
DNK
CAN
MYS FR
AIS
LNZ
LBE
LCR
IAU
TES
PRU
SUS
AKO
RGR
CPH
LZA
FSV
KDE
UTU
RIS
RCO
LIN
DID
NSV
NCH
NTH
AIT
APR
THU
NPO
LCH
LPE
RUR
YJP
NM
EX PRY
ARG
CZE
VEN
BRAZ
IL
0
500
1000
1500
2000
2500
3000
0
500
1000
1500
2000
2500
3000
15
Brazil trades little with the rest of the world
Trade in % of GDP (average 2010-2013)
Source: OECD-WTO Trade in Value Added (TiVA) – July 2015.
Lower tariffs and scale back local content requirements
BR USA
ARG
JPN
COL
AUS
VEN
IDN
ITA
TUR
FRA
NZL
GRC EC
UG
BR ZAF
MEX
NOR
CHL
PRT
FIN
HRV
DEU
SWE
POL
DNK
AUT
ISL
KOR
CHE
SVN
CZE
THA
NLD
MYS BE
LHU
NES
TSV
K
0
20
40
60
80
100
120
140
160
180
200
0
20
40
60
80
100
120
140
160
180
200Trade in % of GDP (average 2010-13)
16
Regulatory barriers to entrepreneurship are high
Indicator scaled from 0 (least restrictive) to 6 (most restrictive)
Source: OECD Product Market Regulation Indicators, 2013, available at www.oecd.org/eco/pmr.
Streamline regulation and reduce barriers to entry
SVK
NZL
NLD
ITA
DNK
AUT
CAN
PRT
GBR RU
SFI
NCH
EES
TPO
LDE
UJP
NFR
AAU
SNO
RHU
NSW
ELU
XBE
LSV
NCZ
EKO
RG
RC IRL
CHL
ISL
ESP
ZAF
MEX IS
RTU
RBR
AZIL
CHN
IND
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
17
Brazil’s infrastructure is poor compared to its major trading partners
Normalised to 1 for the value of Brazil
Source: World Economic Forum, World Bank, FIESP.
Improve the technical capacity and planning for infrastructure concessions Elaborate more detailed tender packages prior to launching tender calls
Road density Rail density0
2
4
6
8
10
12
14
BRAZIL
Major emerging trading partners
Major trading partners
Road quality Rail quality Port quality0
0.5
1
1.5
2
2.5
3
18
Skills are still weak
Percentage of students in secondary education enrolled in vocational programmes
Source: UNESCO Institute for Statistics. Data for 2012.
Boost the participation in vocational training to alleviate skill shortages for technical workers
ZAF
BRAZ
ILCO
LG
BRKO
RLC
NJP
NAR
GNZ
LTH
AO
ECD
HUN
IRL
MEX CR
IRU
SG
RC ESP
IDN
DEU
ISR
EST
FRA
CHN
ISL
CHL
TUR
PRT
DNK
SWE
NOR
LUX
FIN
SVK
CHE
AUS
SVN
ITA
CZE
BEL
AUT
NLD
0
10
20
30
40
50
60
0
10
20
30
40
50
60
19
Policies to improve public health services
20
Medical staff is in short supply
Practising doctors Practising nurses
Train more doctors and nurses Implement targets for expanding specialised medical services to reduce
waiting times
Source: OECD Health Statistics 2015.
RUS
PRT²
DEU
CHE
ITA
ESP
FRA¹
OEC
DG
BR USA
CAN¹
JPN
POL
KOR
MEX
CHL²
BRAZ
ILCO
LTU
R¹CH
NZA
FIN
DID
N
0
1
2
3
4
5
6Per 1 000 population
CHE
DEU
USA¹
JPN
CAN
FRA¹
OEC
DG
BR RUS
ITA¹
PRT¹
CHL²
POL
KOR
ESP
MEX CH
NTU
R¹BR
AZIL
IND
ZAF
IDN
COL
02468101214161820
Per 1 000 population
21
Regional disparities are large
Registered doctors per 1000 inhabitants
Source: Conselho Federal de Medicina (2013): Pesquisa Demográfica Médica no Brasil.
Strengthen incentives to reduce geographic imbalances
Doctors Doctors affiliated to SUS
22
Enhance spending efficiency in healthcare
Potential gains in health-adjusted life expectancythrough efficiency improvements, at constant expenditure levels
Source: OECD calculations based on World Bank and WHO data.
Enhance spending efficiency, including by developing a more explicit definition of what is covered wider use of performance indicators and incentive-based mechanisms shifting the emphasis from hospital care towards primary care services
KOR
JPN
ITA
ESP
CO
LIS
RC
RI
PRT
THA
GR
CFR
AC
HL
PER
CH
EAU
TAU
SBO
LID
NU
RY
NZL
MEX
VEN
CH
NPA
NSW
EBE
LTU
ND
EU EST
NLD
ARG
POL
FIN
NO
RG
BRD
NK
TUR
USA
BRAZ
ILIN
DR
US
ZAF
0
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
23
Improving equity in health expenditures is key
Per capita health expenditures, USD at purchasing power parities
Source: OECD Health Statistics 2015, http://dx.doi.org/10.1787/health-data-en; WHO Global Health Expenditure Database.
Gradually phase out the tax deductibility of private healthcare expenses to free more resources for the SUS
Raise funding for public healthcare
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Brazilians with private health insurance
Brazilians without private health in-surance
Brazil - average
24
Great Good
Regular
Bad
Very bad
N/A
The quality of care could be improved
Perceived quality of public healthcare services
Source: CNI, 2012.
Improve the collection of performance indicators and enhance the use of benchmarking and incentive-based mechanisms, including pay-for-performance schemes
Provide stronger incentives for accreditation of hospitals. Strengthen the licensing process, including enforcement mechanisms
Improve the coordination of healthcare services and the exchange of information by linking databases across healthcare providers
Over 60% of respondents say “bad” or “very bad”
25
Further recommendations on healthcare
Develop clinical guidelines for the choice of cost-effective medicines
Set reference prices for all medicines
Define an exclusive list of reimbursed medicines
Strengthen the role of regional networks through stronger leadership of states
Improve the co-ordination and exchange of information by linking databases
Provide more long-term care services in the public healthcare system
26
SUMMARY: Main Findings
o The fiscal position has deteriorated. Additional long-term fiscal challenges will arise from population ageing.
o Inflation has risen above the tolerance band.
o A fragmented system of indirect taxes causes high compliance costs.
o High trade protection and weak competitive pressures hold back productivity.
o Public healthcare services are facing severe capacity constraints and are unevenly distributed across the country.
o Many healthcare services that are currently provided in hospitals could be provided more cost-efficiently in primary healthcare units and long-term care services.
27
Key Recommendations
o Implement the fiscal adjustment in line with medium-term objectives, including a stabilisation of gross debt
o Gradually raise the retirement age and index pensions to consumer prices
o Consolidate indirect taxes into a value-added tax with a broad base
o Lower tariffs and scale back local content requirements
o Define clearly what is covered in public healthcare services.
o Expand the use of performance indicators and incentive-based mechanisms in healthcare
o Train more doctors and nurses and implement targets for expanding specialised medical services to reduce waiting times
28
More Information…
www.oecd.org/eco/surveys/economic-survey-brazil.htm
OECD
OECD Economics
Disclaimers: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
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