World Bank raises Brazil’s GDP growth forecast in 2022

World Bank raises Brazil’s GDP growth forecast in 2022

The World Bank increased its 2022 growth forecast for Brazil’s Gross Domestic Product (GDP) from 1.5% to 2.5%, due to the impetus of the reopening of the economy and the increase in commodity prices.

In 2023, the agency expects activity in the country to cool down to 0.8%, due to the slowdown in the global economy, rising interest rates in the US and falling commodity prices. The numbers are included in the report “New Approaches to Solving the Fiscal Deficit”, published this Tuesday (4th), by the institution.

In an interview, the World Bank’s vice president for Latin America, William Maloney, said that the effects of a more challenging global scenario next year are already incorporated into the bank’s projection of a “relatively low” growth for the country in 2023. All of Latin America should be impacted by this scenario, he said.

For the vice president of the World Bank, the country’s fiscal situation is not negative, despite the increase in debt as a result of the financial assistance paid to the population during the pandemic. “Brazil’s fiscal situation is not especially difficult by regional standards,” said the analyst.

Maloney warned, however, that it will be necessary to observe the impact of the increase in interest rates on the payment of the Brazilian debt, but recalled that this situation is also shared by the rest of Latin America.

Regarding the elections, Maloney said the World Bank should “work constructively” with any of the elected candidates to advance an agenda that raises the country’s economic growth, increases inclusion and takes effective measures in terms of climate action.

“We have worked with the Bolsonaro and Lula administrations in the past and we will work constructively with whoever is elected,” said the World Bank vice president. “We have a long schedule to work on in Brazil.”

Regarding the increase in inflation expectations for 2024 observed in the Focus report, Maloney stated that the general picture in Latin America is still one of controlled expectations, although the “incipient” movement observed is a source of concern.

“Obviously, in the long run, you don’t want inflation expectations to rise and be built into wage negotiations, which in turn drive up prices. We want to avoid this kind of spiral. This is a concern in the United States, this is a concern everywhere,” she said.

Source: CNN Brasil