Brazil should grow below the world average and that of developing countries, says IMF

Brazil’s economy is expected to grow this year below the global average, the average for Latin America and the average for developing countries, according to a report by the International Monetary Fund released this Tuesday (11).

While, according to IMF projections, Brazil should see its GDP (gross domestic product) grow 2.8% in 2022, the world should register an average growth of 3.2%.

The data comes at a time when the current president, Jair Bolsonaro (PL), advertises in his re-election campaign that Brazil was the country that best recovered from the world crisis. report of Sheet last month showed that since the governments Dilma Rousseff and Michel Temer (2011-2018) Brazil has had growth below the global average, and the IMF report shows that the trend will be repeated with the current president.

Latin America is also expected to see its economies expand above the Brazilian average, with growth of 3.5% at the end of the year — with bigger increases in countries like Argentina (4%), Colombia (7.6%), Bolivia ( 3.8%) and Uruguay (5.3%).

Brazil is part of the group of emerging markets and developing economies, which should also have an average growth rate above that of Brazil, with 3.7%. India is expected to see 6.8% GDP growth, while China is expected to see its GDP grow 3.2%. The Chinese index, however, is low by the country’s pre-pandemic standards, and this is one of the reasons that help explain a low global average, according to the IMF. In China, the weakening of the real estate sector, which represents a fifth of the country’s economic activity, and the continuity of lockdown policies to contain the virus have weighed on.

For next year, Brazil’s outlook is even worse, with GDP growing by just 1%, while the world is expected to grow by 2.7% — which is already considered low by IMF levels. (For Brazil, the Central Bank predicts GDP growth of 2.5% next year and 2.7% this year).

The report comes amid the annual meetings of the International Monetary Fund and the World Bank, which take place throughout the week in the US capital, Washington, with politicians and economists from around the world. It is the first time that meetings have taken place completely in person since 2020, with the outbreak of the Covid-19 pandemic.

The Minister of Economy of Brazil, Paulo Guedes, and the president of the Central Bank, Roberto Campos Neto, traveled to the city. Guedes met with ministers of economy and agriculture from the G20 countries this Tuesday morning, and will also have meetings throughout the day with businessmen and representatives of the IDB (Inter-American Development Bank).

It is noteworthy, however, that the Fund revised upwards its growth forecasts for Brazil —2 points more than forecast in April this year —, while expectations dropped in other regions. The US, for example, is expected to end the year with growth 2.1 percentage points lower than the IMF forecast in the first half of the year.

The report also points out that Brazil should end the year with inflation of 9.4%, a high level, but similar to that of other economies in the region such as Colombia (9.7%). In the United States, inflation, at historic levels, should close the year at 8.1%, the fund projects.

The most serious cases on the continent occur in Venezuela (210% forecast) and Argentina (72.4%). The fund predicts, however, that in 2023 these two countries will maintain or even increase hyperinflation, while the index should fall in Brazil (to 4.7%), the United States (to 3.5%) and in almost all countries in the world. region.

Persistent and unbridled inflation is the biggest threat to the global economy, points out the IMF, and a number of reasons explain the rise in prices. In Europe, the energy crisis is particularly heavy, with a reduction in gas supply after the start of the Ukrainian War. The conflict has also put pressure on food prices around the world, with the difficulty of exporting grain, affecting lower-income countries the most. Another factor influencing prices globally was the rise in oil – and it may be more significant now that OPEC+ has approved a cut in production of barrels per day.

Data released by the IBGE this Tuesday show deflation (price drop) of 0.29% in September, a drop in the IPCA for the third consecutive month.

The IMF advocates that central banks respond firmly to inflation, but warns that a higher-than-necessary interest rate hike could push economies into an unnecessarily severe recession. The basic interest rate in Brazil, currently at 13.75%, is at the highest level since December 2016.