IMF: Economy accelerates from August onwards in Brazil
The International Monetary Fund assesses that, combined with the effects of the interest rate cut policy, domestic demand for products and services will boost the country's growth; the proximity of the World Cup should also contribute, raising growth to 4,6% in 2013.
Brazil Agency - The Brazilian economy is expected to accelerate this semester, driven by domestic demand for products and services. This assessment comes from the International Monetary Fund (IMF), published in a report today (20).
The expectation is that the Brazilian economy will grow by 4% in the last quarter of this year, partly due to the weak comparison base of the last three months of last year and also due to the effects of the interest rate cut policy on the economy.
Last July 16th, the IMF had already reported that it expects the Brazilian economy to grow 2,5% this year. For 2013, the IMF projects growth of 4,6%, slightly above potential – partly due to the economic activity generated by preparations for the 2014 World Cup. For the year of the World Cup, the fund projects growth of 4%.
The International Monetary Fund warns that the main risk in the medium term would be inflation rising slightly above the target midpoint next year – projections indicate a rate of 5% next year.
Based on this assessment, the institution's report predicts that the Brazilian government will begin withdrawing economic stimulus measures possibly by the end of this year or sometime next year.
In a statement commenting on the IMF assessment, the Central Bank (BC) emphasized that "the report also indicates that the policies adopted since August 2011 will promote a gradual recovery of Brazilian economic activity."
"The text highlights that the growth rate of the Brazilian economy will accelerate in the second half of 2012, and should grow by around 4% to 4,5% per year in 2013-2014. It also assesses that the slowdown observed at the end of 2011 was largely due to a stronger-than-anticipated deterioration in the external environment, which affected business confidence," says the Central Bank.
According to the Central Bank, the IMF also considered that the monetary and fiscal policies implemented by Brazil in 2011 and 2012 were positive and adequate to address the external economic crisis.
"The report also points out that inflation is converging towards the center of the target and will remain around it in 2013. Regarding the financial system, the assessment is that it is robust, well regulated, and has adequate supervision and provisions," the note adds.
The Central Bank explains that one of the IMF's roles is "monitoring the economic policy of its members," such as Brazil. To prepare the document, Brazil received a mission of economists from the fund, who visited government agencies in the economic area and some private sector entities. The IMF's "Article IV consultation" mission took place in Brazil from May 7 to 22 of this year.