IMF Improves Global GDP Projections; Brazil GDP Down 4.5% in 2020

RIO DE JANEIRO, BRAZIL – For this year and the next, the fund projects growth of 5.5% and 4.2% in the global economy; and 3.5% and 2.6% in Brazil.

The International Monetary Fund (IMF) on Tuesday revised its projections for the global economy. Updating its World Economic Outlook report, the fund estimates that the global economy dropped 3.5% in 2020 – an improvement over the October projection, which projected a 4.4% decline.

There was also a new improvement in the projections for Brazil: the IMF now expects a 4.5% drop in Brazil’s GDP last year. In October, the projection was for a 5.8% drop – much less pronounced than the 9.1% drop the organization projected for the year in June. Official numbers will be disclosed on March 3rd by the Brazilian Institute of Geography and Statistics (IBGE).

“Despite the high and growing human cost of the pandemic, economic activity seems to be adapting to intensive activities of moderate contact over time. Finally, additional measures announced in late 2020 – mainly in the United States and Japan – are expected to provide further support to the global economy in 2021-22,” the fund says.

The fund has also revised its projections upward for the global economic performance – and that of Brazil – this year.

In the paper, the IMF states that “while recent vaccine approvals have raised hopes for a turnaround in the pandemic later this year, renewed ‘waves’ and new strains of the virus raise concerns about projections.”

Thus, “amid exceptional uncertainty,” the fund projects 5.5% growth in the global economy in 2021 – higher than the 5.2% rate projected in October. For 2022, expected growth stands at 4.2%.

For Brazil, the IMF estimates growth of 3.6% and 2.6% this year and the next. In October, projections pointed to growth of 2.8% and 2.3%.

The United States stands out positively in this revision: the June estimate for an 8% decline was substantially improved to a 4.3% drop.

The United States is expected to outperform the euro zone, with a 3.4% drop, compared to 7.2% in the European bloc – where Spain is the negative highlight, with a tumble of 11.1% followed by a 10% decline in Italy. For this year and the next, the fund expects growth of 5.5% and 4.2%.

Developing economies

In emerging and developing countries, GDP in 2020 should post a decline of 2.4% – much helped by China’s result, where the economy points to a 2.3% growth (followed by strong highs of 11.5% and 6.8% in 2021 and 2022).

Sharper declines in the 2020 figures are expected in Mexico (-8.5%), India (-8%) and South Africa (-7.5%).

For 2021 and 2022, the IMF projects 6.3% and 5% growth in the GDP for emerging and developing economies.

Source: G1