By Jamie McGeever and Isabel Versiani
BRASILIA (Reuters) - Brazil's economy is on track to register "very strong" growth this year, Economy Minister Paulo Guedes said on Tuesday, as the accelerated roll out of COVID-19 vaccinations and protocols help the economy build on its solid performance in the first quarter.
Guedes was speaking after figures showed that Latin America's largest economy grew faster than expected in the January-March period on a quarterly and year-on-year basis, taking it back to its pre-pandemic size in 2019.
Guedes told a lower house education commission that the economy had been growing perhaps as much as 2.5% in the first quarter of last year before the pandemic struck.
"So if we are growing faster than the first quarter of last year ... it is possible that we are actually growing at much higher rates," he said, adding that the 1.2% quarterly pace of expansion in the first quarter bodes well for the year.
The Economy Ministry said that high frequency indicators show the recovery is continuing but warned that the drought affecting the country, one of the worst in decades, could hamper electricity supply and ultimately wider economic activity.
In a statement, the ministry also said that the strength of first quarter growth figures vindicates the government's cautious fiscal stance, and repeated its view that fiscal consolidation, debt reduction and pro-market reforms are fundamental to Brazil's long-term growth prospects.
In the near term, the main positive factors supporting activity are a favorable global scenario, a strong rebound in investment led by the private sector, increased savings, credit growth and job creation as social distancing measures ease, the ministry said.
On the flip side, the main factors that warrant close attention are political risks surrounding the need to continue fiscal austerity and approve economic reforms, uncertainties related to the pandemic, and the nationwide drought, it added.