Opinion – Vinicius Torres Freire: Brazil at the bottom of the world’s growth, in the lens of the IMF

The world’s largest economies will grow less in 2022 than the IMF predicted before the war. Brazil is one of the very few that was saved from the downward revision of the International Monetary Fund’s estimates. Instead of growing 0.3% this year, it would grow 0.8%.

How much will Latin America and the Caribbean grow, in the Fund’s estimation? Triple the Brazilian growth: 2.5%. In the case of 2023, an even riskier guess, Brazil would grow 1.4% and Latin America & the Caribbean again 2.5% (which includes Brazilian growth, of course, pushing the regional average down).

Growth forecasts are often very wrong. The IMF’s (and the World Bank’s and the OECD’s) were horribly wrong once the epidemic began, particularly for Brazil. But, in addition to the numbers, the story told by the Fund has some interest, although it is also nothing new.

The basic argument for an “upward” revision in the Brazilian case is that the country could benefit from the rise in the price of commodities (oil, grains, ores), those same high prices that push inflation up and disgrace the purchasing power of salary.

Furthermore, Brazil is not in the group of emerging countries that suffered from capital flight due to the war crisis. In fact, the coming and going of money has improved in Brazil since the beginning of this year (after some very bad years, by the way).

And?

Hence, even benefiting from the equivocal and dubious luck of inadvertently earning a few bucks from the war, Brazil continues to walk slowly even by the less than mediocre standards of the neighborhood. This has been the case since the early 2010s. In the accounts of the Fund’s economists, it would still be the case from 2019 to 2023.

Based on 2019, the last year before the epidemic, and taking estimates up to 2023, Brazil would grow 2.4% in the quadrennium. Latin America & Caribbean, 4.4% (even including the Brazilian deadweight loss. Without Brazil, it will grow much more).

In advanced economies, growth would be 6.3% in this four-year period (the United States, Canada, Japan, the European Union of the euro, the United Kingdom and some of the smaller riches). In the world’s weighted average, the cumulative growth from 2019 to 2023 would be 10.3%.

Yes, in this global package it has the weight of China, India and East Asian countries. But why are we making excuses, so to speak? Yes, apologies: to say that China is an exceptional case. Or to say that India is a different and understandable case of a very poor country that succeeds in getting out of low income (as Brazil has already done), as is also the case of certain African countries.

But what is happening even with the countries of the Middle East and Central Asia? They will grow 11.3% in the 2020-2023 quadrennium. Oh yes, there are oil countries like Saudi Arabia, but not only. But, yes, we are a freak, no matter where you look. The growth of the economy of Sub-Saharan Africa in this period would be 10.9%, according to the more or less informed guesses of the IMF.

Unsurprisingly, Brazil has been an aberration since 2014. Even economic growth after 2010 and before the Great Recession fell by the wayside compared to the South American neighborhood.

More incredible is that the topic has all but disappeared from the conversation, as if our manifest destiny will sink into oblivion and as if we are now limited to just keeping “institutions going” so that many of us don’t have to go into exile.