MercoPress. South Atlantic News Agency

World Bank releases contrasting projections for Brazil and Argentina

The World Bank's Global Economic Prospects report is published twice a year

The World Bank foresees a 1.2% growth this year for the Brazilian economy and a 2% contraction for that of Argentina, it was reported Tuesday.

In a scenario it classified as “global economic resilience,” the World Bank raised its forecast for Brazil's Gross Domestic Product (GDP, the sum of the wealth produced in the country) growth from 0.8% to 1.2% in 2023. The projection is included in the Global Economic Prospects report, released on Tuesday by the financial institution.

Agencia Brasil also noted that despite the improvement in 2023, the World Bank reduced, from 2% to 1.4%, the growth projections for the Brazilian economy in 2024, compared to the previous report, released in January. For 2025, the multilateral organization estimates an expansion of 2.4%.

Published twice a year, the report lists the World Bank's estimates for the performance of economies all over the planet. According to the multilateral organization, despite the improvement in some Latin American countries, the economic growth this year will be sustained mainly by exports, in a scenario of difficulties caused by persistently high domestic inflation and rising interest rates.

For the global economy, the document raised the estimate of economic growth from 1.7% to 2.1%. According to the World Bank, the United States and other large economies are proving resilient in the face of interest rate increases decided by the major central banks.

Even with the improvement, the World Bank's estimate represents a slowdown compared to 2022, when the global economy grew by 3.1%. For 2024, the report decreased the growth forecast from 2.7% to 2.4%. According to the international organization, high interest rates will have effects next year, through the fall in commercial and residential investments.

Meanwhile, Argentina's economy has been projected to shrink by 2% in 2023 as a result of the intense drought that the South American country went through. The World Bank's outlook for 2024 is for Argentina's GDP to grow by 2.3 % “as the economy recovers from the severe drought that has affected its agricultural production this year,” the report said. It also predicted that by 2025 economic growth will be 2 percent.

The downturn forecast for Argentina's economy coincides with the slowdown in growth in the Latin American and Caribbean region estimated at up to 1.5 percent by the agency.

“Weak growth in advanced economies is expected to impact export demand, while continued tight monetary policies in those economies and persistently high domestic inflation are likely to prevent any substantial improvement in financial conditions in the near term,” the World Bank said.