Bonds News

UPDATE 1-Brazil government raises 2017, 2018 GDP growth estimates

(Adds details on pension reform, context)

BRASILIA, Dec 14 (Reuters) - The Brazilian government on Thursday raised its forecasts for 2017 and 2018 gross domestic product growth amid a faster-than-expected recovery from the deepest recession in decades.

Brazil’s economy is now expected to grow 1.1 percent this year and 3.0 percent next year, Finance Minister Henrique Meirelles said, up from 0.5 percent and 2 percent previously.

Officials stressed uncertainty about the 2018 figures, however, given doubts about President Michel Temer’s proposal to narrow a budget deficit by trimming the social security system.

Financial markets currently price a one-third chance of the bill passing, estimated Economic Policy Secretary Fabio Kanczuk.

Approval of the pension reform would add 0.3 percentage points to the government’s 2018 growth estimate, lifting it to 3.3 percent, he said.

It seems increasingly unlikely that the unpopular plan will see a vote in the lower house of Congress this year, following stiff opposition. Taking up the issue in next year risks even more pushback from lawmakers with an eye on October’s general election. (Reporting by Bruno Federowski and Marcela Ayres; Editing by Bernadette Baum and Chizu Nomiyama)