The estimate for the growth of the Brazilian economy in 2017 was cut in 0.3 percentage point to 0.2%. Saudi Arabia growth estimate was cut in 1.6 percentage point to 0.4%.
From the Newsroom*
São Paulo – The International Monetary Fund (IMF) kept unchanged its forecasts for the growth of the global economy for 2017 and 2018 in 3.4% and 3.6%, respectively, but reduced in 0.1 percentage point, to 4.5%, its estimate on the growth of emerging and developing countries this year, while raising by the same proportion its growth forecast for the Gross Domestic Product (GDP) of developed nations, which stands at 1.9%. The data is part of an update for the World Economic Outlook report, made public this Monday (16). The original data was presented by the Fund on October 2016.
Among the forecasts that were revised down is the one on Brazil. The Fund now expects the country to grow only 0.2% in 2017. There was a reduction of 0.3 percentage point over October’s forecast. For 2018, the growth estimate remained at 1.5%.
According to the IMF, the reduction of Brazil’s growth forecast shows the frustration with the economic performance of the second half of 2016, considered to be below expectations, plus the more restrictive financial conditions in effect in the country. Latin America as a whole also had its growth forecast for 2017 revised down in 0.4 percentage point to 1.2%. According to the Fund, a similar scenario to Brazil is playing out in Argentina. Plus, uncertainties around the new government in the United States are impacting Mexico and Venezuela’s economy continues to deteriorate.
In the Middle East, the IMF highlights the forecasts on Saudi Arabia. The growth estimate for this year was revised down in 1.6 percentage point to 0.4% and for 2018 it was reduced in 0.3 percentage point to 2.3%. The report states that the reassessment reflects the cut in oil output agreed upon by members of the Organization of the Petroleum Exporting Countries (Opec). Last week, the Saudi minister of Energy, Khalid Al-Falih, declared that the country already cut its output to below 10 million daily barrels, the lowest volume since 2015.
The Fund also points out that conflicts in the region brings heavy consequences to many countries in the Middle East and not only to those directly involved, but also to their neighbors.The IMF outlooks are in contrast to those by the World Bank and released last week. For instance, the IBRD revised up its growth forecast for the Brazilian economy to 0.5% in 2017, against an estimate pointing to a GDP decline of 0.1% made in last June. In the case of Saudi Arabia, the bank is expecting a GDP growth of 1.6% this year.
US is an unknown factor - According to the IMF, one of the main unknowns regarding the 2017 performance of the global economy are the actions to be taken by US president-elect, Donald Trump, after he takes office on January 20. “There is a wide dispersion of possible outcomes around the projections, given uncertainty surrounding the policy stance of the incoming U.S. administration and its global ramifications,” says the report. In the Fund’s assessment, there’s the risk of the country adopting protectionist and isolationist policies. Regarding commodities, the Fund believes that oil prices should stabilize after the agreement made by OPEC and non-OPEC members. Prices are already trending up in the last few weeks. The IMF also says that metal prices went up due to China’s real estate and infrastructure sectors demand and with the expectation around the US relaxing their fiscal stance.
*Translated by Sérgio Kakitani