By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Despite the uneasiness expected in the political arena due to the upcoming Presidential elections in Brazil in October, international agencies and consultancies are a bit more optimistic this year with the country’s economic growth. Nonetheless, most warn that economic improvement will be gradual and that a market-friendly future president is critical for economic growth sustainability.

Brazil,IMF director, Maurice Obstfeld, speaks at the entity's Spring Meeting
IMF director, Maurice Obstfeld, speaks at the entity’s Spring Meeting, photo by Stephen Jaffe/IMF.

“The economic recovery appears to be strengthening, after growth accelerated in the final quarter of 2017. A market-friendly outcome from October’s elections, is, however, critical to supporting the economy’s outlook,” said the latest forecast report by FocusEconomics released on Tuesday, April 17th.

According to FocusEconomics the incoming president will need to focus on correcting government finances, approving the much-awaited the pension reform and complying with the constitutionally-mandated spending cap.

The international consultancy firm predicts Brazil’s GDP to grow by 2.5 percent in 2018 and 2.8 percent in 2019.

FocusEconomics’ prediction is slightly higher than the latest forecast by the International Monetary Fund (IMF), which on Tuesday raised Brazil’s growth projection to 2.3 percent in 2018 and 2.5 percent in 2019.

According to the international entity, the historically low levels of inflation and the easing of monetary policy in Brazil is favoring the gradual return of economic activity.

“The growth momentum has risen to levels higher than we expected. This was also helped by the fact that very low inflation last year made room for the Central Bank to lower interest rates and support the economy,” stated IMF Research Adviser and Economic Director Maurice Obstfeld during the press o.

The World Bank went further stating in its latest report that the economies of Latin America and the Caribbean are rebounding this year, driven by the growth of Brazil and Argentina. According to the World Bank, Brazil will register a 2.4 percent growth 2018 and 2.5 percent in 2019.

“There have been important reforms in Brazil, perhaps not at the expected speed, but there have been fiscal and economic reforms,” stated World Bank’s chief economist for Latin America and the Caribbean, Carlos Vegh, in the report.


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