ECLAC raises growth forecast for Brazil to 2.6% this year

The Brazilian economy should grow more than initially foreseen this year, but it will slow down from next year on, the United Nations Economic Commissions for Latin America and the Caribbean (ECLAC) announced on Wednesday (Oct 19). This year, the country´s Gross Domestic Product is expected to grow 2.6 percent, against a previous estimate of 1.6 percent. In 2023, Brazil should grow 1 percent, at the same pace as Argentina.

ECLAC has revised the 2022 projections for Latin American and Caribbean economies disclosed in August and released the estimates for 2023. The region's economy is expected to expand 3.2 percent this year, against a previous forecast of 2.7 percent. For 2023, growth should stand at only 1.4 percent.

The commission estimates that Brazil's economic growth will be below the regional average next year. In South America, Brazil is only expected to perform better than Chile, whose economy should expand by 0.9 percent next year.

Factors

According to ECLAC, two factors shall contribute to the economic slowdown in Latin America and the Caribbean next year. The first one is the war between Russia and Ukraine, which negatively affects global growth, and accentuates pressures on inflation, volatility in the international market, and financial costs.

The second factor responsible for damaging the region's economy is the interest rate increases by the central banks of developed economies, which hinders the flow of capital to emerging countries. Monetary tightening in developed countries causes the devaluation of Latin American and Caribbean currencies, and makes financing more expensive for countries in the region, ECLAC says.