Transcript of the Video Message by Angel Gurría
20 October 2020 OECD, Paris
It is my pleasure to address the United States-Brazil Connect Summit.
The COVID-19 pandemic threatens the stability of our economies and our societies.
Our latest Economic Outlook projects global GDP to fall by 4.5% this year – with some of the hardest hit G20 economies seeing their GDP shrink by over 10%. While growth is expected to pick up to 5% next year, output in many countries will still be below the pre-crisis levels by the end of 2021.
This crisis has also exposed a number of pre-existing structural vulnerabilities in our economies and societies. This is why now is the critical moment to think and plan for a new normal that adapts to the realities of our changing world. We must build back the global economy in a way that protects the environment, that protects public health, and that safeguards people’s well-being. We must “build back better”.
Brazil is well placed to support this effort. Like many countries, it was pulling out of a long recession when the COVID-19 outbreak hit, bringing the economy back into another, even deeper recession. During the second quarter of 2020, output contracted by 9.7% , and we project that there will be an annual contraction of 6.5%.
However, the government’s swift reaction has made a difference. As early as March, Brazil’s Congress declared a state of emergency and freed up funds for the federal government to fight the pandemic. These measures have been important to provide support for millions of vulnerable households, including those without formal employment and social protection.
Brazil should make sure that the recovery is inclusive, sustainable and green. In Brazil, the richest 10% of the population receives 42% of total income, almost double the average OECD share of 24%. The high degree of inequality hinders both well-being and long-term economic growth. Brazil needs to build a strong social contract with current and future generations, reducing informality and expanding the coverage of the social protection system.
Brazil should also focus on raising productivity to boost growth in the long-run. The government should keep advancing its structural reform agenda, promoting competition, reducing regulatory burdens and tax complexity, and promoting further international trade.
With a land area of 8.5 million square kilometres, Brazil needs to invest in connectivity and infrastructure, including expanding communication networks in rural and remote areas, to foster an inclusive and dynamic growth.
Digital transformation can strengthen long-term resilience of small and micro businesses and help increase the effectiveness of e-learning and training programmes, bringing better quality education to remote regions. Next week we will launch the OECD Going Digital Review of Brazil, with a number of specific recommendations in this regard.
Finally, with 60% of the Amazon forest within its borders and home to the largest biodiversity reserve in the world, Brazil has the potential to lead the way in reshaping and rebuilding our global economy, in a greener, more resilient, more inclusive way.
The OECD remains dedicated to supporting Brazil in these efforts. Over the last two decades we have built a fruitful collaboration and Brazil, which has also become our most engaged Key Partner.
As part of the adherence process to the OECD Codes of Liberalisation, Brazil has implemented important policy measures to level the playing field for foreign investors.
To name a few, the equity limit for foreign investors in Brazilian air transport companies was removed; the limit for investment abroad of Brazilian open pension funds was increased; the requirements for foreign participation and establishment in the Brazilian banking sector were simplified; and participation in the reinsurance sector by foreign providers was expanded. In addition, Brazil’s Congress is considering a new legislation to modernise foreign exchange regulations, which will further attract foreign investments.
We are also making impressive progress in our four-year joint project with Receita Federal on Transfer Pricing. This work has become increasingly more relevant in light of the crisis. Indeed, the positive outcomes may be key in helping the government raise additional tax revenues by preventing the current Base Erosion and Profit Shifting.
They may also attract more foreign investment by removing the risks of double taxation.
Ladies and Gentlemen,
No country can face a pandemic alone. No country can address a crisis alone. And no country can build back better alone. Pooling our forces and our know-how is the only way to ensure a truly resilient and sustainable recovery. You can count on the OECD to intensify its efforts with all stakeholders, so that together, we can build a fairer, more inclusive and resilient post-COVID-19 world.