INSIGHTS
- Following the conclusion of the Article IV Consultation with Brazil, the IMF predicted that growth in Brazil will slow this year, to 1.2% from a projected 3.0% in 2022.
- The IMF then anticipates an improvement in growth to 1.4% in 2024 and 2% over the medium term.
- While core inflation is still high, inflation expectations have somewhat increased.
Brazil’s economic growth is expected to moderate this year, but it is expected to pick up in the following years, according to the International Monetary Fund (IMF). The IMF has predicted that growth will drop down to 1.2% this year from 2.9% in 2022 as a result of the Article IV Consultation with Brazil. The IMF is upbeat about the future, anticipating that Brazil’s growth would go up to 1.4% in 2024 and then accelerate to 2% over the next several years.
Brazil’s economic growth is expected to moderate this year, but it is expected to pick up in the following years, according to the International Monetary Fund (IMF). The IMF has predicted that growth will drop down to 1.2% this year from 2.9% in 2022 as a result of the Article IV Consultation with Brazil. The IMF is upbeat about the future, anticipating that Brazil’s growth would go up to 1.4% in 2024 and then accelerate to 2% over the next several years.
The protection of vulnerable households, who are most negatively impacted by high inflation, depends on bringing down inflation. In keeping with the framework for targeting inflation that has worked successfully for Brazil, the monetary policy is compatible with doing so.
The government has set forward an ambitious plan to lead a sustainable, inclusive, and environmentally friendly economy. There are several opportunities for greener growth, including making use of Brazil’s comparative edge in renewable energy, it stated.
“While core inflation is still high and headline inflation has dropped somewhat from its peak last year, inflation expectations have slightly increased. By the middle of 2025, headline inflation is anticipated to converge to the objective. There are dangers to the downside of the forecast. However, robust safeguards, such as a stable financial system, substantial public sector cash reserves, and sufficient foreign exchange reserves, encourage resilience, according to IMF official Ana Corbacho, who oversaw the discussions this year.
The IMF suggested “a more ambitious” fiscal effort that lasts through 2026 in order to keep social and investment expenditure protected while putting debt on a steadily falling path. This effort would be backed by an improved fiscal framework, substantially enlarging the revenue base, and measures that address spending rigidities.
The protection of vulnerable households, who are most negatively impacted by high inflation, depends on bringing down inflation. According to the framework for controlling inflation that has worked successfully for Brazil, the monetary policy stance is compatible with bringing inflation down to goal, Corbacho continued.
By- Mansi Suryawanshi
