Increased hydrocarbon production ups IMF growth estimate for Brazil

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An International Monetary Fund (IMF) team, led by Ana Corbacho and Daniel Leigh, conducted discussions with Brazilian authorities and stakeholders for the 2024 Article IV Consultation from May 15-27, 2024. The IMF issued a statement highlighting Brazil’s economic resilience and future projections.

In its Concluding Statement, the IMF said Brazil’s economy has shown “remarkable resilience” with inflation decreasing over the past two years. It said growth is expected to moderate to 2.1% in 2024 and 2.4% in 2025, down from 2.9% in 2023. Inflation is projected to reach 3.7% by the end of 2024 and align with the 3% target by mid-2026.

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Brazil’s current account deficit narrowed in 2023 due to a strong trade surplus and was supported by robust foreign direct investment (FDI), the IMF noted. Over the medium term, the IMF projects that growth is anticipated to strengthen to 2.5%, an upward revision of 0.5% points from previous estimates in the 2023 Article IV Staff Report. 

The IMF said improvement is attributed to the implementation of efficiency-enhancing VAT reforms and increased hydrocarbon production. Additionally, investments in green growth opportunities could further enhance Brazil’s economic potential.

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The IMF noted an improved balance of risks to the growth outlook since the 2023 Article IV Consultation. However, the macroeconomic and fiscal impacts of the recent flood calamity in Rio Grande do Sul remain uncertain. 

The IMF also said that Brazil’s resilience is bolstered by a sound financial system, adequate foreign exchange reserves, low reliance on foreign exchange debt, substantial government cash buffers, and a flexible exchange rate.


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