IMF improves Brazil’s growth projections

The Brazilian GDP growth projection, made by the International Monetary Fund (IMF), increased by half a percentage point, from 1.7% to 2.2%. The forecast was released this Tuesday (16), in the first edition of the 2024 World Economic Panorama. Expectations for next year were also increased, going from 1.9% to 2.2%.

According to the agency, the improvement in projections for the Brazilian economy is associated with fiscal consolidation and the lagged effects of the fall in the interest rate (Selic), which still remains restrictive. The document also highlights the smaller contribution of the agricultural sector to growth,

The Fund’s projections are higher than those of the Brazilian financial market. The median projections for GDP expansion are 1.95% for this year, according to the Focus report, published by the Central Bank (BC). It is the ninth consecutive week of growth in the estimate. For 2025, the forecast is that economic activity will increase by 2%.

For inflation, the IMF forecast for 2024 is 4%, above the median expectations of the Focus report, which is 3.71%. It is also above the center of the Central Bank’s target, which is 3%, but within the tolerance range, which is 1.5 percentage points up or down.

The Fund is more optimistic in relation to the projection for the IPCA in 2025. The body signals a 3% increase in prices, below the median of Focus expectations, which increased for the second week in a row, to 3.57%.

In relation to unemployment, the entity projects a rate of 8% at the end of this year and 7.9% for next year. The latest release from the Brazilian Institute of Geography and Statistics (IBGE) indicated a rate of 7.8% in the moving quarter ending in February.

For the world economy, the indication is a 3.2% growth in world GDP for 2024 and 2025, repeating the performance recorded last year. The GDP expansion projection for the United States, the largest global economy, increased from 2.1% to 2.7%, reaffirming the resilience of economic activity in the country. For China, the expectation is for growth of 4.6%, the same forecast as January.