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Brazil's economy expected to contract 1% as challenges remain unaddressed, says IMF report

Wednesday, April 15th 2015 - 07:46 UTC
Full article 11 comments
“Private sector sentiment remains stubbornly weak because of unaddressed competitiveness challenges and the fallout from Petrobras investigation” “Private sector sentiment remains stubbornly weak because of unaddressed competitiveness challenges and the fallout from Petrobras investigation”

The International Monetary Fund expects Brazil's economy to contract by one percent this year, it said Tuesday, slashing its previous forecast of 0.3% growth. The world's seventh-largest economy is being hit by inflation, private-sector doldrums and a massive corruption scandal at state oil giant Petrobras, the IMF said in its latest forecast.

 “Private sector sentiment remains stubbornly weak because of unaddressed competitiveness challenges, the risk of near-term electricity and water rationing, and the fallout from the Petrobras investigation,” said the Fund in its quarterly projections for the world economy.

“Greater-than-expected need for fiscal tightening also plays a role in the downward revisions.”

That ratchets the pessimism up a notch from the IMF's previous two forecasts: In January, it predicted Latin America's leading economy would grow 0.3% in 2015, and in October it predicted growth of 1.4%.

The outlook is slightly better for 2016, when the IMF predicts one-percent growth, down from 1.5% in the previous forecast.

The IMF said it expects inflation to come in above the government's target ceiling of 6.5% for the year. In March the annual inflation rate stood at 8.13%, squeezing consumers.

Like fellow emerging economies China, India and South Africa, Brazil needs to implement reforms in education, labor and product markets to raise competitiveness and productivity, the IMF said.

Categories: Economy, Politics, Brazil.

Top Comments

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  • ilsen

    But hasn't Rousseff declared Petrobras to be 'clean' now? Seems the fall out continues. ..

    Apr 15th, 2015 - 08:03 am 0
  • Chicureo

    From the press: “RIO DE JANEIRO – The Brazilian military is ignoring calls by government opponents for an army “intervention” against the government of President Dilma Rousseff, the country’s defense minister said Tuesday.”

    There was a similar headline in Chile in early 1973...

    Apr 15th, 2015 - 09:41 am 0
  • Skip

    “Like fellow emerging economies China, India and South Africa, Brazil needs to implement reforms in education, labor and product markets to raise competitiveness and productivity, the IMF said.”

    What I have been saying for years!

    Interesting that the IMF singles out the BRICS no that their very short fairy tale has ended.

    Apr 15th, 2015 - 11:27 am 0
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