São Paulo – World economy’s expected to grow 3.9% this year and in 2019, according to the new World Economic Outlook, released this Tuesday (17) by the International Monetary Fund (IMF). The report forecasts a 2.3% growth for Brazil’s Gross Domestic Product (GDP) this year and of 2.5% in 2019. For the Middle East, North Africa, Afghanistan and Pakistan, the Fund expects a growth of 3.4% in 2018 and of 3.7% next year.
The IMF pointed out that the world economic growth last year was the highest since 2011 and that developed economies will continue to expand above their potential in this year and the next. According to the Fund, countries in the Euro Zone will narrow excess capacities with support from accommodative monetary policy and an expansionary fiscal policy will drive the US above full employment.
The Fund believes that the growth of emerging and developing economies will consolidate, with a strong growth in Asia and Europe, and a modest recovery among commodity exporters, after three years of weak performance.
The IMF states that the decline in metal prices since 2011 and the collapse of oil prices in 2014 created a split in the performance of emerging markets economies that import or export commodities.
The report points out that large economies such as Brazil and Russia went through deep recession in 2015 and 2016. It also underscored the recessions and decelerations faced by countries such as Saudi Arabia and other oil exporting countries in the Middle East and Sub-Saharan Africa, until they adjusted their fiscal policies to the permanent loss of commodity revenues.
Looking ahead, the IMF believes that the improvement in commodity prices seen in 2017’s second half offers to oil exporting countries a space to slowly consolidate their fiscal balance. However, the Fund sees that domestic political discord and strife in these countries continue to weight heavily in their economies.
Regarding emerging and developing economies, the IMF forecasts a growth of 4.9% in 2018 and of 5.1% in 2019, figures boosted mainly by Asia and improved outlook to commodity exporters. Brazil’s economy should grow driven by a greater dynamism of local consumption and investments.
In the Middle East, North Africa, Afghanistan and Pakistan, even if the recovery of oil prices allows for an improvement of domestic markets of oil exporting countries, there’s still a need for fiscal adjustments to drive growth.
IMF’s forecast for the growth of the world economy this year stands 0.2 percentage points above the forecast released in October of last year, for both 2018 and 2019. But, after the next two years, world growth should slowdown, according to the Fund.
The current recovery offers a window of opportunities to advance policies and reforms to safeguard the upswing and raise medium-term growth to the benefit of all, states the IMF. “Such policies should focus on strengthening the potential for higher and more inclusive growth,” says the Fund’s report.
Translated by Sérgio Kakitani
