The International Monetary Fund (IMF) significantly raised the estimate for the growth of Brazilian activity this year, despite the difficulties faced by the global economy. However, it began to see weaker performance in 2023.
In reviewing the estimates in its Global Economic Perspective report, released today (26), the IMF started to estimate the growth of Brazil’s Gross Domestic Product (GDP) this year at 1.7%, well above the rate of 0.8% calculated in April.
For 2023, the IMF report indicates that the expansion of activity will be 1.1%, 0.3 percentage point less than forecast in April.
The IMF estimate, however, is still slightly below that of the government, which calculates that the Brazilian GDP is expected to grow 2%, in this year. The Ministry of Economy forecast for 2023 is 2.5%.
The improving outlook for Brazil helped boost the outlook for growth in Latin America and the Caribbean, with the IMF now seeing the region’s GDP increase by 3% this year, 0.5 points higher than in the previous report.
But by the same token, the estimate for Latin America and the Caribbean next year has worsened by 0.5 point to 2%.
World economy
According to IMF forecasts, global GDP growth will slow to 3.2% in 2022, from a forecast of 3.6% released in April.
World growth rebounded in 2021 to 6.1% after the Covid-19 pandemic crushed global production in 2020 with a 3.1% contraction.
“The outlook has significantly worsened since April. The world could soon be on the brink of a global recession, just two years after the last one,” IMF chief economist Pierre-Olivier Gourinchas said in a statement.
Among the reasons that led the IMF to reduce its projection for world GDP in 2022 by 0.4 point are higher inflation worldwide, a stronger-than-expected slowdown in China due to new outbreaks of covid-19 and negative repercussions of the war in Ukraine.
For China, the fund cut growth prospects by 1.1 point for 2022 and 0.5 point for 2023, going to 3.3% and 4.6% respectively.
“The risks to the outlook are predominantly negative. The war in Ukraine could lead to a sudden halt in gas imports from Russia into Europe; it could be more difficult to reduce inflation than expected if labor markets are tighter or if inflation expectations unanchor”, highlighted the IMF.
*With information from Reuters.
