IMF boosts Latin American growth prospects, but worsens outlook for Brazil

imf latin america brazil
IWF headquarters in Washington. Photo: Christian Thiel/Shutterstock

The International Monetary Fund (IMF) increased its growth forecasts for Latin America, but tweaked Brazil’s outlook downward, bringing its expected 2021 GDP increase to 5.2 percent — under the 5.3 percent predicted in June. Revised Brazil projections were in line with global forecasts, however, which were also turned downward amid “worsening pandemic dynamics” in low-income developing countries and “supply disruptions” in advanced economies.

Overall, the IMF expects the continental recovery to be propelled by a rise in international commodity prices, with Latin America expected to grow 6.3 percent this year, up by 0.5 percentage points when compared to the previous quarter’s estimates, and 1.7 percentage points more than six months ago.

The improved regional forecast was led by countries such as Colombia, which is now expected to grow 7.6 percent this year (+2.5 v. April), while a 7.5 percent bounceback is also forecasted in Argentina (+1.7 v. April). A strong 11 percent recovery is predicted in Chile, with Peru following close at 10 percent in 2021, and Mexico is tipped to grow 6.2 percent.

Such buoyant figures are unlikely to continue into 2022, with Mexico, Chile, and Peru set to grow no more than 5 percent, while Brazil’s forecasted GDP increase is a meager 1.5 percent for next year.