Deceleration shows fear of investors, says Malpass – 04/13/2023 – Market

The economic slowdown in Brazil indicates investor concerns with the challenging global scenario, said this Thursday (13) the president of the World Bank, David Malpass. He also cited the uncertainties following the election of President Luiz Inacio Lula da Silva and the effects of rising interest rates to curb inflation.

Brazil should maintain a growth rate below the Latin American average, which is already considered low, as in previous years, according to the bank’s projection released last week.

The institution projects that in 2023 the country’s GDP (gross domestic product) will grow by 0.8% compared to the previous year. The value is close to what the market predicts, of 0.9%, according to the latest Focus bulletin from BC (Central Bank).

The World Bank’s projection is just over half the forecast for Latin America’s growth, of 1.4% in 2023, the lowest regional rate in the world. In the following two years, the expected growth is 2.4% per year.

Malpass pointed out that the country raised interest rates before other countries, between 2021 and 2022, while there was still debate about the persistence of inflation and central banks resisted raising interest rates.

“What we see now is the reaction of the high interest rate and also the uncertainties of the election”.

“The slowdown also indicates investor concerns. It is a global challenge, investment flows in developing countries have reversed and there is an outflow of money. It is urgent for Brazil to have good economic policies to accelerate growth, and this will allow spending what the government wants to do with the social and environmental purposes of climate change.”

Malpass said that “it’s vital to have a strong focus on accelerated growth going forward” and that “the good news is that interest rates have already gone up”. “The biggest pressure is on fiscal discipline and the efficiency of regulatory policies to support growth,” he said.

The American joked that it has become “a common phrase” to say that Brazil has enormous potential, and highlighted the agricultural production capacity and the potential attraction of the global supply chain.

Appointed during the Donald Trump administration, David Malpass is leaving the World Bank. In his place, President Joe Biden appointed Indian-American Ajay Banga, former CEO of Mastercard.