By Ben Tavener
SAO PAULO
The International Monetary Fund drastically cut its 2015 outlook for expansion in the Brazilian economy, according to a report published Tuesday.
The January 2015 edition of the global lender's flagship World Economic Outlook report said the Brazilian economy would see GDP growth of 0.3 percent this year.
It is the fourth consecutive time that the IMF has cut its Brazil growth forecast. In January 2014 the prediction stood at 2.8 percent but by October it had already been halved to 1.4 percent. Its forecast for 2016 was also revised downward from 2.2 percent to 1.5 percent.
"In many emerging and developing commodity exporters, the projected rebound in growth is weaker or delayed compared with the October 2014 projections, as the impact of lower oil and other commodity prices on the terms of trade and real incomes is now projected to take a heavier toll on medium-term growth," the report said.
This latest prediction is in line with that of local economists. The most recent survey by Brazil's central bank of more than 100 analysts showed a projected growth of 0.38 percent for the year.
The IMF also cut its GDP figure for 2014, from 0.3 to 0.1 percent. Official government figures for 2014 are expected by March.
The downward revision comes despite the installation by President Dilma Rousseff of a new economic team, led by finance minister Joaquim Levy, who has been charged with getting the economy back on track.
Levy has already announced several steps, including cuts to government spending and tax hikes on fuel and personal credit, in a bid to rebalance the government's books and recapture investor confidence in the country's once-booming economy.
The IMF’s outlook for Brazil is well below the 1.3 percent average outlook it calculated for the Latin America-Caribbean region for 2015 -- which has been revised down by 0.9 percent.
Other institutions have also reduced their outlooks for Brazil. Last week the World Bank lowered its forecast for Brazil’s GDP growth in 2015 to 1 percent, after predicting growth of 2.7 percent last June.
The Economist Intelligence Unit said it believed the Brazilian economy would expand 0.5 percent in 2015, but that revisions to oil prices would impact future forecasts. According to its website, "weaker labor market dynamics, softer Chinese demand, slower credit growth and a failure to advance structural, growth-enhancing reforms" are behind the country's slower longer-term growth.
The global growth outlook for 2015-16 was also revised downward by the IMF by 0.3 percent, to 3.5 and 3.7 percent respectively.
"The revisions reflect a reassessment of prospects in China, Russia, the euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices," the report said, adding that the U.S. was "the only major economy for which growth projections have been raised."
