Image credit: EU Observer

The International Monetary Fund (IMF) left unchanged estimates for economic activity in Brazil this year and next, and stressed that the country seems close to turning the game as  effects of past shocks decline.

IMF announced on Tuesday its report “Global Economic Outlook”, with the projection of the Gross Domestic Product (GDP) contracting 3.3% in 2016, with growth of 0.5% in 2017. Thus, the fund maintained the calculation made in the report review in July.

“Brazil’s economy remains in recession, but the activity seems to be near its inflection point as the effects of past shocks … down,” said the IMF in the report, referring to the fall in commodity prices, adjustments administered prices of 2015 and political uncertainties.

Still, the scenario for Brazil is very weak when considering the general framework for Latin America and the Caribbean, which is projected to contract by 0.6% this year and growth of 1.6% next year. In South America, the expected decline for Brazil this year is not only worse than the 10% decline projected by the IMF to Venezuela.

In 2017, in addition to Venezuela, Ecuador must also record decline in activity in the fund’s accounts – 4.5% and 2.7%, respectively. South America as a whole should decline to 2% of GDP in 2016, but should register an increase of 1.1% next year.

The IMF said that in Brazil there is a broad need to improve confidence and increase investment – two points that have been strongly highlighted by the government as essential – through the strengthening of economic policy frameworks. “By adopting the proposed spending rule and present a coherent medium-term fiscal consolidation framework, it will send a strong sign of commitment,” said the IMF.

The result of GDP in 2016 expected by the IMF to Brazil is close to the view of economists in the Central Bank’s Focus survey, which see contraction of 3.14%. For 2017, however, the survey points BC expected expansion of 1.3%.

Also in the report, the IMF calculated that inflation Brazilian consumer will close this year to 9%, decelerating in 2017 to 5.4%. For unemployment is expected to 11.2 and 11.5% respectively.

More about the report can be read here.

SOURCEÉpoca Negócios
Carlos Monteiro is a Brazilian citizen, graduated in Business Administration by the Catholic University of São Paulo. He lives in Odense, Denmark with his Danish Wife, Cathrine, and their half Danish /Brazilian daughter Ines Marie. You are very welcome to be in contact him at any time.
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