BRAZIL: IMF Increases GDP Growth Forecast For 2017, Cuts 2018 Estimate

(RTTNews) – The International Monetary Fund (IMF) raised Brazil’s economic growth forecast for this year but reduced its expansion estimate for 2018, highlighting the political uncertainty in the country.

According to the IMF, the Brazilian Gross Domestic Product (GDP) should rise by 0.3% in 2017 and 1.3% in 2018. In April, the growth forecasts were at 0.2% and 1.7%, respectively. “The severe Brazilian economic recession seems to be nearing an end,” IMF said in the report.

In the medium term, according to the IMF, Brazil’s GDP should move to an annual expansion of 2%, although the recent increase in political instability could hurt the economy’s predictability.

“The government’s ability to deliver on social security reform, a necessary step toward securing fiscal sustainability, has become more uncertain – and, with national elections scheduled for 2018, the window for legislative action is closing,” the Fund said.

Regarding inflation, the IMF projects that it will remain below the 4.5% target for this year and next. The slowdown in inflation, according to the Fund, should make room for more monetary easing.

“After almost two years of being above the ceiling of the central bank’s tolerance range of 6.5 percent, inflation has declined rapidly over the past year. The impact of large increases…