Brasília – The International Monetary Fund (IMF) changed down its Brazilian economic growth forecast for this year from 2.3% to 1.8%. The new projection is in the latest version of the Fund’s World Economic Outlook report made public this Monday (16). In 2019, the IMF sees Brazil’s Gross Domestic Product (GDP) widening by 2.5%, the same as in the previous report.
The IMF report cites political uncertainty and protracted effects from the trucker strike in late May and early June as drivers of the weaker GDP growth expectation. Brazil’s currency, the real, slid by over 10% as a result of the political climate and a weaker-than-expected economic recovery.
The IMF’s global growth forecast remains at 3.9% this year, but Latin America and the Caribbean are now seen growing by 1.6%, down from a prior 2%. The 2019 forecast eased from 2.8% to 2;6%.
The Fund’s estimate regarding Brazil is sunnier than the Brazilian Central Bank’s and that of Brazilian financial market players. In its latest Inflation Report, released in late June, the monetary authority had revised down its 2018 GDP growth forecast from 2.6% to 1.6%.
In the Bank’s latest issue of the weekly Focus Bulletin, containing the results of a poll of market analysts, expected growth had dropped from 1.53% to 1.5%.
Translated by Gabriel Pomerancblum
