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IMF encouragement for Brazil’s economy gradual upturn

Thursday, August 29th 2013 - 02:48 UTC
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“Brazil's economy is recovering gradually from the slowdown that began in mid-2011” says the IMF report “Brazil's economy is recovering gradually from the slowdown that began in mid-2011” says the IMF report

The Brazilian economy is on a gradual upturn from the slowdown begun in mid-2011, the IMF says while urging Brasilia to continue efforts to rein in inflation. The country's 12-month inflation reached 6.27% in July, close to the upper limit of the government target of 6.5%.

“Brazil's economy is recovering gradually from the slowdown that began in mid-2011,” the IMF Executive Board said in its annual assessment of the Brazilian economy on Wednesday.

It hailed the Brazilian government for beginning this year ”to focus on alleviating supply-side constraints (including infrastructure bottlenecks) and containing inflationary pressures by tightening monetary policy”.

IMF board stressed that “comprehensive efforts to boost productivity, competitiveness, and investment are critical for raising potential growth”.

“To this end, it will be important to increase domestic saving, improve the minimum wage indexation mechanism, and continue to reform the pension system,” they added.

The Brazilian government initially forecast 4% growth domestic product (GDP) growth this year, but gradually revised downward, the last time last week to 2.5%. The IMF is also projecting 2.5 per cent growth. Brazil posted an anaemic GDP growth of 0.9% last year after 2.7% in 2011.

The IMF also commended Brazilian authorities “for their long-standing commitment to sound policy frameworks,” including the flexible exchange rate. The real sank to 2.45 to the greenback last week, its lowest level since 2008.

The IMF also welcomed “the initiation of a monetary tightening cycle, and agreed that monetary policy should remain geared at containing inflationary pressures and anchoring inflation expectations”.

It voiced support for the government's market-based concessions program, saying it ”would boost investment and alleviate infrastructure bottlenecks”.
 

Categories: Economy, Brazil, Latin America.

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