WASHINGTON – The International Monetary Fund (IMF) revised on Tuesday its economic growth forecast for Brazil upward to 0.70 percent for this year and 1.5 percent for 2018 due to stronger consumer spending.
“In Brazil, strong export performance and a diminished pace of contraction in domestic demand allowed the economy to return to positive growth in the first quarter of 2017, after eight quarters of decline,” the IMF said in its World Economic Outlook report.
This signals that Brazil is returning to economic growth after a long recession that shrank the South American country’s gross domestic product (GDP) by 3.6 percent last year.
Nevertheless, the IMF warned about “ongoing weakness in investment and an increase in political and policy uncertainty” due to political uncertainty in Brazil.
“After entering positive territory in the first half of 2017, growth in Brazil is expected to reach 0.70 percent for the year and 1.5 percent in 2018,” the report said. “A gradual restoration of confidence – as key reforms to ensure fiscal sustainability are implemented over time – is projected to raise growth to 2 percent in the medium term.”
The upward revisions for Brazil and Mexico – the other major Latin American economy – improved the regional outlook from a 1 percent estimated growth rate three months ago to 1.2 percent GDP growth this year.