International Monetary Fund sees Brazil’s economic growth of more than 2% this year

performance

The IMF went on to see an expansion of Brazil’s Gross Domestic Product of 2.1% in 2023

The International Monetary Fund improved its estimate for the growth of the Brazilian economy this year after the strong performance in the first quarter, but lowered the perspective for 2024 in a report released this Tuesday (25). The information is from Folha de SP.

In updating its Global Economic Perspective report, the IMF now sees an expansion of Brazil’s Gross Domestic Product (GDP) of 2.1% in 2023, an increase of 1.2 percentage points compared to the April estimate. However, for 2024 the IMF projection was reduced by 0.3 percentage points, to 1.2%.

According to the IMF, the upward revision of this year’s estimate is due to “the increase in agricultural production in the first quarter of 2023, with positive repercussions on service activity“.

The Brazilian economy beat expectations in the first quarter with a growth rate of 1.9%, reflecting the strongest performance of the agricultural sector in almost three decades. However, the restrictive monetary policy should still weigh more heavily on activity ahead, containing the expansion.

After this GDP result, the IMF projections made in April were criticized by President Luiz Inácio Lula da Silva, who said he wanted to prove that the Fund was wrong about its perspective for the country’s growth.

But even with the revision, the IMF estimate for 2023 is still a little more pessimistic than that of the Ministry of Finance, which this month started to calculate a growth of 2.5% for GDP this year, against a forecast of 1.9% made in May. For 2024, the portfolio presented an estimate of a rise of 2.3%, the same as in May.

Agency raises global growth forecast

The IMF raised its 2023 global growth estimates due to resilient economic activity in the first quarter, but warned that persistent challenges were hurting medium-term prospects.

The fund said inflation is falling and acute stress on the banking sector has eased, but the balance of risks facing the global economy remains tilted to the downside and credit is tight.

The global lender said it now projects real global GDP growth of 3.0% in 2023, up 0.2 percentage points from its April forecast, but left its outlook for 2024 unchanged, also at 3.0%.

The 2023-2024 growth forecast remains weak by historical standards, well below the 3.8% annual average seen in 2000-2019, largely due to weakening manufacturing in advanced economies, and could remain at that level for years.

“We are on the right path, but we are not out of the woods”,

said IMF Chief Economist Pierre-Olivier Gourinchas, noting that the update was largely driven by Q1 results.

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