O International Monetary Fund (IMF) updated Brazil’s economic growth projections, raising the estimate for 2024 to 3%, an increase of 0.9 percentage points compared to the previous forecast of 2.1%. The positive review was released this Tuesday in the report Global Economic Outlook.
The report identifies strong domestic demand as the main drivers of growth, characterized by robust private consumption and increased investment, driven by a tight labor market and government transfers.
Furthermore, the impacts of the floods at the beginning of the year were smaller than expected, contributing to a more favorable economic scenario than expected.
However, the IMF also adjusted its forecasts for 2025, reducing the growth expectation of the Gross Domestic Product (GDP) from 2.4% to 2.2%. The institution justifies this review with the maintenance of a restrictive monetary policy and an expected cooling of the job market.
The national economic scenario was marked by a better-than-expected performance in the first half of the year, with controlled inflation and an increase in income that surprised analysts.
The Brazilian economy grew 1.4% in the second quarter compared to the previous quarter, according to data from the Brazilian Institute of Geography and Statistics (IBGE)which will publish third-quarter GDP numbers on December 3.
On the other hand, there is an expectation of an economic slowdown due to the reduction in fiscal stimuli and the high level of interest rates. The Selic base rate, currently at 10.75%, could reach 11.75% at the end of the year after the latest Central Bank meetings, according to Focus research.
For the future, the IMF report also included projections for Brazilian inflation, expecting an average of 4.3% in 2024 and 3.6% in 2025.
In a broader context, projections for Latin America and the Caribbean have been adjusted. Growth for the region was revised to 2.1% in 2024, an increase of 0.3 percentage points. For 2025, however, there was a cut in expectations, with the growth forecast being reduced by 0.2 points, to 2.5%.
Brazil’s economic performance this year balanced the negative revisions for other economies in the region, such as Mexico, whose projection was reduced to 1.5%.
The report also highlights that, for emerging and developing economies, the growth forecast remains stable at 4.2% for this year, but has suffered a slight reduction to the same percentage in 2025.
Source: https://www.ocafezinho.com/2024/10/22/fmi-eleva-de-novo-as-projecoes-de-crescimento-do-brasil-em-2024/
