World Bank raises growth projection for Brazil

The World Bank on Wednesday raised its projection of Brazil’s GDP growth to 2.6 percent in 2023, up from a 1.2 percent projected growth in an earlier report in June.

The new report highlights that inflation is receding in Latin America, and that countries such as Brazil and Chile have recently begun to reduce their interest rates.

Excluding Argentina and Venezuela, the average inflation rate in Latin America is 4.4 percent, compared to 6.4 percent in OECD countries or 8.6 percent in Eastern Europe. This is due in part to food and fuel costs dropping after a sharp increase with the full-fledged Russian invasion of Ukraine in early 2022.

The report also highlights Brazil’s high consumer confidence levels, and the role of its Central Bank in aggressively raising interest rates starting in 2021 in order to avoid inflation. On the other hand, Brazil still has high indebtedness and default rates. 

The country is also mentioned as an “extreme example” in terms of debt, with interest rates paid by the federal government representing over 7 percent of GDP.

“Latin America and the Caribbean continues to competently manage challenges of weak global demand, higher debt, uncertainty surrounding the war in Ukraine, and the ongoing although diminishing inflationary pressures affecting many regions of the world,” the report’s summary says.

Although economic prospects for the region improved, they “remain low.” The highest projected growth in the region, by far, is for Guyana (29 percent), which has been exploring newly discovered oil reserves in the last few years. The GDP in Argentina, Chile, and Haiti is expected to drop this year.

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