August 18, 2022
The World Bank lowers its forecast for Brazil's GDP and sees worse performance among major emerging markets - 01/11/2022 - The Market

The World Bank lowers its forecast for Brazil’s GDP and sees worse performance among major emerging markets – 01/11/2022 – The Market

The World Bank lowered expectations The growth of the Brazilian economy in 2022 From an estimated 2.5% in June of last year to 1.4%, according to a report released this Tuesday (11).

This is the lowest growth rate among the 18 emerging countries that the institution highlighted its forecast. Looking at 28 economies in Latin America and the Caribbean, Brazil should only overtake Haiti, where a recession is expected.

The numbers are part of the document Global Economic Prospects.

For the World Bank, global growth is expected to slow sharply, from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023, as pent-up demand dissipates during the pandemic and fiscal and monetary support diminish worldwide. In 2020, the world’s gross domestic product (GDP) decreased by 3.4%.

By 2023, all advanced economies will have made a full recovery from the economic crisis caused by the pandemic. According to the foundation, start-ups and growing companies will remain 4% lower than the previous trend. One explanation is that many emerging and developing economies are phasing out supportive policies to contain inflationary pressures long before recovery is achieved.

Brazil, which has emerged again in inflation rates And high interest rates, for example, will be lower than the average global growth in this period, according to projections of the institution. After declining 3.9% in 2020, Brazilian GDP is expected to grow, respectively, 4.9%, 1.4% and 2.7%, respectively, in the following three years, from 2021 to 2023.

Estimates for Brazil made by the World Bank are higher than those provided by the Central Bank of Brazil, at 4.4% in 2021 and 1% in 2022. The forecasts of a BC Focus survey with analysts show growth of 4.5% and 0.28%, respectively.

“Brazil’s economy is expected to slow to 1.4% in 2022, thanks to weak investor sentiment, eroding purchasing power due to rising inflation, macroeconomic policy constraints, lower demand from China, and lower iron ore prices,” the report says. in its Latin American and Caribbean Annex.

According to the foundation, growth in the countries of this region should slow from 6.7% last year to 2.6% this year. This movement is attributed to the restrictions on monetary and fiscal policies, the still slow improvement in labor market conditions and unfavorable external conditions for these countries.

According to the bank, by 2023, the region will lose ground in per capita income compared to developed economies as well as emerging economies in Asia and Europe.

For the World Bank, after a strong recovery in 2021, the global economy is entering a sharp slowdown amid threats from the new variables of Covid-19, rising inflation, debt and income inequality. These factors could jeopardize the recovery of emerging and developing economies.

The bank says the rapid progress of the omicron variable indicates that the pandemic is likely to continue to affect economic activity in the medium term. In addition, the marked slowdown in major economies, including the United States and China, will affect external demand in emerging and developing economies.

David Malpass, UEFA President, said: “The global economy is simultaneously confronted with Covid-19, inflation and political uncertainties, with public spending and monetary policies in a region yet to be mapped out with a global bank.

“Putting more countries on a favorable growth path requires coordinated international action and a comprehensive set of national policies in response.”

The report includes a section on the impact of COVID on global inequality. The assessment notes that the pandemic has increased global income inequality, partially reversing the decline achieved over the past two decades.

The pandemic has also increased inequality in many other areas of human activity, such as access to education, health care, and the labor market, which have been greater for women, informal workers, and low-skilled workers.

“This trend has the potential to leave lasting marks: for example, human capital losses due to disruptions in education can extend into generations,” the report says.