The labor market and the cyclical recovery

BRAZIL ECONOMICS - Report 07 Jan 2019 by Affonso Pastore, Cristina Pinotti, Marcelo Gazzano and Caio Carbone

The consensus projections are for modest acceleration of the cyclical recovery. The main impulse should come from fixed capital investment, and the strength of its propagation to boost consumption will depend crucially on improvement in the labor market, whose behavior will be continually monitored in our analyses. So far, however, the recovery of the job market has been fragile and concentrated in the informal sector, and the latest empirical evidence indicates that the increase in the occupied population will be slow, limiting the expansion of household consumption.

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