São Paulo – Growth in Brazil and the countries in the Middle East and North Africa is expected to slow down this year, according to forecasts released this Tuesday (21) by the International Monetary Fund (IMF). According to the institution, the Brazilian Gross Domestic Product (GDP) should increase by 2.3% this year, 0.2% less than what had been predicted last October, when the World Economic Outlook was published, and which has now been updated.
In the revised edition of the document, the institution also stated that the Arab countries are expected to grow less: from the 3.6% estimated in October to 3.3% in the most recent calculations. The IMF believes that the Brazilian GDP will also grow less in 2015. From 3.2% forecasted in October to 2.8% in the latest estimate. The Arab countries, which had been forecasted an increase by 4.1% in the previous estimate are now being forecasted 4.8% in 2015, therefore an increase in forecasts in this case.
The revised IMF calculations, however, indicate greater growth than expected for the world economy and the developed countries. The global GDP is expected to increase by 3.7% this year, 0.1% more than the October calculations. For 2015, the 3.9% growth estimate was maintained. The United States economy is expected to grow 2.8% in 2014, whereas the previous forecast indicated an increase by 2.6%. For 2015, however, the country is expected to increase by 2.6% and not 3%, as was previously estimated. The Euro Zone GDP is expected to grow by 1% this year and 1.4% in 2015, against the previous forecasts of 0.9% and 1.3%, respectively, made in October.
In an announcement released this Tuesday, the IMF chief economist, Olivier Blanchard, stated that global recovery is stronger, and that it “was largely anticipated”, despite still being mild and uneven. He observes that growth is stronger in the United States than in Europe and more consistent in parts of the Euro Zone than in some countries in the south of the European continent. Furthermore, stated Blanchard, unemployment is still high and the risks of deceleration persist.
“The basic reason behind the stronger recovery is that the brakes to the recovery are progressively being loosened. The drag from fiscal consolidation is diminishing. The financial system is slowly healing. Uncertainty is decreasing,” stated Blanchard in the announcement.
At a press conference, Blanchard spoke specifically about Brazil. He observed that public investment in infrastructure was insufficient to drive the economy, and that the country, much like other emerging nations, depends on the demand from developed countries, forecasting that the Brazilian economic performance will probably not be noteworthy with the low commodity prices.
The growth forecast for emerging countries this year is of 5.1% and 5.4% in 2014, due above all to the acceleration of the Chinese economy. The IMF expects the Asian country’s GDP to grow by 7.8% this year and 7.5% next year due to investments in infrastructure. As for the countries in the Middle East and North Africa, the IMF report explains that the lower growth forecasts in 2014 and 2015 mainly reflect the expectations of a slow recovery of oil production in Libya, because of the uprisings that affected production in some of the country’s fields in 2013.
Despite the challenges, Blanchard stated that the IMF forecasts a “strong” growth for the emerging economies in 2014 and 2015, although not as strong as before. “On the one hand, these countries will benefit from higher advanced growth in advanced economies. On the other, as US monetary policy normalizes, they will face tighter financial conditions,” he said.
*Translated by Silvia Lindsey
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