IMF Downgrades Brazil Ming (2020) Economic Growth Forecast

The International Monetary Fund (IMF) released the 2019 world economic outlook autumn report in October 15th (2019). It raised Brazil's economic growth this year, from 0.8% of the original estimate to 0.9%, but the growth forecast for the 2020 (2020) year decreased from 2.4% to 2%. Nevertheless, Brazil is still one of the countries with the most moderate forecast of South American growth.

According to IMF, Argentina's economy will decline 3.1% this year, and next year it will decline to 1.3% and decline. As for Venezuela, 2019 was -35% and 2020 was -10%. Ecuador is -0.5% this year, next year is 0.5%. The situation in Uruguay is expected to grow by 0.4% this year and 2.3% next year. The strongest growth expected by the fund is Bolivia, which will grow by 3.9% this year and 3.8% next year.

The fund noted that Brazil had resumed growth in the second quarter of this year after the first quarter recession caused by the Brumadinho mud dam collapse. However, it did not contribute to the outlook for 2020. According to the report, the pension reform plan is a "basic" step to ensure the feasibility of social security and the sustainability of public debt. In addition, the specific fiscal policy must conform to the government expenditure ceiling in the coming year. As long as inflation expectations remain stable, monetary policy can be relaxed to support economic growth. To increase growth potential, the government will need ambitious ambitions, including tax reform, trade liberalization and infrastructure investment.

IMF expects Brazil inflation (IPCA) to be 3.8% in 2019 and 3.5% in 2020. The current account deficit is estimated to be 1.2% in 2019 and 1% in 2020. The fund also expects the unemployment rate to be 11.8% this year and 10.8% in the coming year.