Brasília – The International Monetary Fund (IMF) has raised its growth forecast for the Brazilian economy in 2010. According to a survey disclosed today (26th) by the IMF, the country’s Gross Domestic Product (GDP) should increase by 4.7% this year.
The estimate is more conservative than the official projections. According to the Ministry of Finance, the GDP, i.e. the sum of all goods and services produced in the country, will grow by 5.2% this year. Minister Guido Mantega announced the projection last week, during the first ministerial meeting of the year. In its Inflation Report, published in late December, the Brazilian Central Bank forecasts growth of 5.8%.
Despite being less optimistic than government projections, the IMF’s forecast shows improve compared with the previous survey. As of October, the IMF forecasted that the country would grow 1.2% in 2010. In 2011, the IMF estimates that the Brazilian GDP should grow by 3.7%, whereas in October the forecast rate was 0.2%.
According to the IMF, the growth rate of the Brazilian economy will remain lower than those of other emerging countries. The survey estimates that developing economies will grow by 6% in 2010 and 6.3% in 2011. The pace, however, will be set by India and China, which should expand by more than 7.5% in these two years.
To the Monetary Fund, the main challenge after the international financial crisis will be controlling the inflow of funds into emerging economies. These funds, the IMF warns, may generate new asset bubbles in developing nations, which will require attention from economic authorities.
With regard to advanced countries, the fund recommends gradual withdrawal of economic stimulus programs, despite the impact these measures have had on the public debts of developed nations. In order not to raise concern over fiscal sustainability, the IMF advises governments to have clearly defined communication strategies regarding the withdrawal of fiscal and monetary stimuli.
The reform of financial institutions should remain a priority, according to the IMF. According to the survey, lawmakers around the world must move boldly in order to lower the risks of future instability prompted by investment in risky assets.
*Translated by Gabriel Pomerancblum
