Economy

IMF: Latin America's forecast gets better thanks to Brazil and Mexico

At the same time, the organization maintained its 6% global growth forecast for 2021

The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, U.S., September 4, 2018. Photo: Reuters/Yuri Gripas.File Photo
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  • The IMF on Tuesday maintained its global growth estimate of 6% for 2021, but improved (a lot) the projections for the Brazilian economy;
  • The organization cited positive repercussions for Mexico related to the improvement in the scenario for the United States and also the fact that Brazil has been favored by the rise in commodity prices.

The International Monetary Fund on Tuesday maintained its 6% global growth forecast for 2021, upgrading its outlook for the United States and other wealthy economies but cutting estimates for developing countries struggling with surging COVID-19 infections.

The divergence is based largely on better access to COVID-19 vaccines and continued fiscal support in advanced economies, while emerging markets face difficulties on both fronts, the IMF said in an update to its World Economic Outlook.

READ ALSO: Brazil interest rates expected to hit 7.00% by the end of the year

“Close to 40% of the population in advanced economies has been fully vaccinated, compared with 11% in emerging market economies, and a tiny fraction in low-income developing countries,” Gita Gopinath, the IMF’s chief economist, said during a news conference. “Faster-than-expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of COVID-19 cases in some countries, notably India, have led to downgrades,” she said.

For Latin America, things got a little bit better thanks to Brazil‘s and Mexico‘s new estimates: a 5.8% growth in 2021, 1.2 points more than in April projections. The forecast for the region next year, in turn, improved only by 0.1 points, to 3.2%.

READ ALSO: Brazil and Mexico: How cenbanks of the two largest Latam’ economies face rising inflation

The IMF pointed to 5.3% growth for the Brazilian GDP in 2021, 1.6 percentage points more than it had estimated in April. However, for 2022 the country’s growth projection was reduced by 0.7 points, to 1.9%.

The organization cited positive repercussions for Mexico related to the improvement in the scenario for the United States and also the fact that Brazil has been favored by the rise in commodity prices.

The IMF’s projection for the expansion of the Brazilian GDP this year was in line with that of the country’s Ministry of Economy and also with market specialists consulted by Brazil‘s Central Bank (5.29%) every week.

(Co-written by LABS)

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