The Brazilian economy should end the year with growth of 2.5%, according to new estimates released today (4) by the World Bank. The previous projection was at 1.5%. For 2023, the international organization maintained the growth forecast for the Gross Domestic Product (GDP) at 0.8%.
Estimates are more in line with government forecasts. At the end of September, the Economic Policy Secretariat of the Ministry of Economy increased from 2% to 2.7% GDP growth projection in 2022 LINK 1 .
For 2023, projections differ. The Union’s General Budget proposal forecasts growth of 2.5%, while World Bank estimates point to a much smaller expansion.
The new estimates were released in advance of the annual autumn meeting (in the Northern Hemisphere) of the International Monetary Fund (IMF) and the World Bank. The meetings take place next week, between the 10th and 16th, in Washington.
According to the report, social spending and investments (public works and purchase of equipment) are central elements to boost growth in Latin America in the post-covid scenario. However, fiscal balance must be sought. The extra spending must be financed through new taxes, tax reform and measures to improve the efficiency of public spending.
According to the World Bank, 40% of fiscal adjustments in Latin America were based on investment cuts. According to the agency, this type of adjustment can improve public accounts in the short term, but has harmful effects in the long term.
The report shows that 17% of public spending could be cut in some countries, as a result of misdirected transfers, bad purchases and inefficient human resources policies.
Region
For Latin America and the Caribbean, the World Bank raised its GDP growth forecast from 2.5% to 3%. For next year, however, the estimate was reduced from 1.9% to 1.6%. Despite the improvement in projections for Brazil, the country is expected to grow less than most countries in the region. Only Mexico and Chile should end the year with lower growth than Brazil.
Mexico and Chile are one of the few Latin countries that should grow less than Brazil, with variations of 1.8% this year. For 2023, the World Bank forecasts a 0.5% drop in Chilean GDP and a 1.5% increase in Mexican GDP.
