IMF revises up Brazilian and global growth projections for 2018 and 2019

The International Monetary Fund (IMF) raised Brazil's growth projections for 2018 and 2019. The country's Gross Domestic Product (GDP) is expected to grow 1.9% this year, 0.4 percentage point above what was estimated in October. For 2019, the forecast was revised up by 0.1 percentage point over the last projection, to 2.1%.

Released today (Jan. 22), the IMF's World Economic Outlook report also points out that global economic activity is expected to have grown by 3.7% in 2017, which is 0.1 percentage points faster than projected in October, when the last report was launched. IMF also revised up global growth for 2018 and 2019 by 0.2 percentage point, to 3.9%.

According to the report, the pickup reflects, among other factors, “the expected impact of the recently approved United States tax policy changes”. However, reads the document, “due to the temporary nature of some of its provisions, the tax policy package is projected to lower growth for a  few years from 2022 onwards”.

Latin America

The report highlights that the economic recovery in Latin America is expected to strengthen, with growth of 1.9% in 2018 (as predicted in October) and 2.6% in 2019 (a 0.2 percentage point upward revision over October).

“This change primarily reflects an improved outlook for Mexico, benefiting from stronger United States demand, a firmer recovery in Brazil and favorable effects of stronger commodity prices and easier financing conditions on some commodity-exporting countries”, reads the document.  The report also says these projections “more than offset further downward revisions for Venezuela”.

However, the document stresses that noneconomic factors put the economic rebound in risk. “Political uncertainty gives rise to reform implementation risks or the possibility of reoriented policy agendas, including in the context of upcoming elections in several countries such as Brazil, Colombia, Italy and Mexico”.