IMF cuts Brazil's GDP growth forecast down to 0.3%

The International Monetary Fund (IMF) has once again reduced the growth rate estimated for the Brazilian economy this year. The country's GDP is now expected to rise 0.3%—one percentage point below the forecast announced in July, 1.3%.

Should predictions prove accurate, this will be the worst performance delivered by the Brazilian economy since 2009, when the GDP stood at a negative 0.3%. Apart from the decline observed five years ago, as a result of the global economic crisis, other unsatisfactory figures were reported in 1999, when the Brazilian economy expanded a mere 0.3%, and in 1998, when the nation's GDP froze at 0.0%.

For 2015, the IMF's estimate for the Brazilian economy is 1.4%—0.6 percentage points below the prediction made in July. The forecast for the expansion in the global economy, in turn, stands at 3.3% for this year, and 3.8% for 2015. The new figures are found in the World Economic Outlook, released on Tuesday (Oct 7).

According to the IMF, Brazil's lower competitiveness, investors' harmed confidence, and more restricting financial conditions (with raised interest rates up to April 2014) kept investments restrained. As for the moderate dynamic predicted for the Brazilian economy in 2015, with a growth estimate of 1.4%, it is due to the political uncertainty ahead of the presidential elections.

Regarding the inflation experienced by Brazil, the IMF says the increase in prices is likely to stay at 6.3% this year and 5.9% in 2015, i.e., within the upper range of the official target, whose center stands at 4.5% and upper limit at 6.5%.

Translated by Fabrício Ferreira