SAO PAULO
The Brazilian economy is now forecast to grow just 1.8% in 2014, a quarterly report by the International Monetary Fund (IMF) released Tuesday revealed.
The international lender has now cut its forecast for gross domestic product (GDP) growth for Latin America's biggest economy four times in the last year from the four percent outlook in April 2013. The forecast was 2.3 percent in January 2014.
The IMF also reduced its growth forecast for Brazil in 2015 by 0.1 percent, to 2.7 percent.
Growth will be more sluggish than previously forecast because of poor levels of infrastructure, higher-than-desired inflation, and low private investment in the country, which will drive down confidence in industry, the IMF report said.
The Brazilian government is more optimistic, however, and the country's official projection for 2014 still stands at 2.5 percent – more than the 2.3 percent growth registered in 2013, and well ahead of 2012's growth of 1.0 percent.
The Brazilian central bank's forecast currently stands at 2.0 percent.
Economists recently surveyed by the Anadolu Agency suggested that Brazil is likely to exhibit only lukewarm mid-term growth of around two percent, unless major fiscal policy changes are implemented.
However, they said this would be “politically unpalatable” at present, with the run-up to general elections this October and falling approval ratings due, in part, to political scandals and preparations for this year's World Cup.
On March 24, ratings agency Standard and Poor's (S&P) cut Brazil's sovereign debt rating to BBB-, still “investment grade” but just one notch above “junk,” citing weak economic growth and budget overruns, although it did upgrade the overall outlook from “negative” to “stable.”
Of the BRICS group of emerging economics, Brazil, Russia, India, China and South Africa, only Russia suffered a bigger cut in its IMF forecast, and is expected to see growth of just 1.3 percent.
China, on the other hand, is expecting growth of 7.5 percent – the level at which the Brazil economy was performing in 2010 when confidence was still high in the country.
India should see 5.4 percent growth and South Africa, expansion of 2.3 percent.
In South America, Peru is set to lead the region with predicted growth of 5.5 percent.
However, Argentina will see just 0.5 percent growth, and the IMF believes Venezuela will see its economy contract by 0.5 percent.
The global economy should expand by 3.6 percent, while South America as a whole should increase 2.3 percent.
By Ben Tavener
englishnews@aa.com.tr
