Brasília – The International Monetary Fund (IMF) has revised Brazil’s economic growth projection for this year down to 3%. The growth estimate for the Gross Domestic Product (GDP), i.e. the sum of all goods and services produced in the country, has been revised down 0.5 percentage point from the forecast issued by the IMF in January. The estimate for 2014 has been revised up 0.1 percentage point to 4%.
The projections were released this Tuesday (16th) as a part of the quarterly World Economic Outlook. To the IMF, Brazil’s economy will grow by a lower rate than the forecasted international average (3.3%) for 2013. The global GDP growth estimate is down 0.2 percentage point from January projections. In 2014, the world economy is expected to be up 4%, the same rate as in 2013.
The estimate for Latin America and the Caribbean (3.4%) is down 0.3 percentage point from January. In 2014, the estimate remains at 3.9%. To the IMF, Latin American growth should be backed by “a pickup in external demand, favorable financing conditions, and the impact of earlier policy easing in some countries.”
The document asserts that the slowdown of growth in economies in the region from 2011 to 2012, from 4.5% to 3%, reflected “a slowdown in external demand and, in some cases, the impact of domestic factors.”
Said deceleration, according to the IMF, was “particularly pronounced in Brazil, the region’s largest economy, where large policy stimulus failed to spur private investment.” The IMF adds that the slowdown in Brazil ended up spilling over to its regional trading partners, such as Argentina, Paraguay and Uruguay.
According to the Fund, economic activity is expected to pick up steam in Brazil this year, reflecting the lagged impact of domestic policy easing and measures targeted at boosting private investment. However, according to the IMF, supply constraints could limit growth in the near term.
Last year, Brazil’s GDP was up 0.9%, according to the Brazilian Geography and Statistics Institute (IBGE).
The IMF advises that in order to consolidate their growth, Latin American countries must “to strengthen fiscal buffers, contain the buildup of financial vulnerabilities, and move forward with growth-enhancing reforms.”
The document also estimates that economic activity in Latin America’s commodity-exporting countries – i.e. those that sell internationally-traded agricultural and mineral products – such as Brazil and Mexico, should remain strong throughout the year. The exception among major Latin American commodity exporters is Venezuela, which is expected to grow by 0.1% this year, as against 5.5% in 2012.
With regard to emerging economies, the IMF adds that the performances of Asia and Latin America are respectively dependent on economic activity in India and Brazil.
*Translated by Gabriel Pomerancblum
