Brazil and Russia contribute to lower global economic growth

The global economy will grow at 3.2% this year and the rate will be 3.5% in 2017, reported today (Apr. 12) the International Monetary Fund. The forecasts have a downward revision, equivalent to 0.2% in 2016 and 0.1% in 2017, compared to previous estimates, according to the World Economic Outlook report. Brazil's and Russia's low growth was the reason pointed out by the report for the global economy to show a lower expansion than expected.

In case the outlook for Brazil's and Russia's economies remains “uncertain", the global economy will be at risk. This hypothesis, according to the report, "could once again push global growth below the current forecast."

“Lower growth means less room for error,” said Maurice Obstfeld, IMF Economic Counsellor, commenting on the report's research. "[However], persistent slow growth has scarring effects that themselves reduce potential output and with it, demand and investment," he alerted.

The current diminished outlook calls for an “immediate response”, Obstfeld said. According to him, if national policymakers were to clearly recognize the risks they jointly face, and act together to prepare for them, the positive effects on global confidence could be substantial.

Emerging economies

The emerging and developing economies will have modest growth compared to the past two decades: 4.1 percent this year and 4.6 percent in 2017. According to the IMF report, the factors for this modest performance are slowing growth in oil exporters, with oil price decline, and still weak outlook for non-oil commodity exporters, including in Latin America.

A sharper slowdown in China, deep recessions in Brazil and Russia, and weak growth in some Latin America and Middle East countries also influenced the weak growth in emerging nations

On the positive side, India remains a bright spot, with strong growth and rising real incomes, according to the IMF.

Translated by Amarílis Anchieta