IMF's report on Brazil: GDP projected to expand 5.3%
Economic performance has been better than expected, in part due to the authorities’ forceful policy response. GDP regained its pre-pandemic level in 2021Q1 and momentum continues to be favourable, supported by booming terms of trade and robust private sector credit growth.
Tragically, the COVID-19 pandemic has claimed the lives of more than 550,000 Brazilians.
Renewed lockdowns following a severe second COVID-19 wave early this year and the rollout of vaccination have helped bring down infections since April, with new daily COVID-19 cases and deaths falling significantly from their peaks. The government has procured sufficient doses to inoculate the adult population in 2021, with the most vulnerable population expected to be fully inoculated by the end of the year.
Real GDP is projected to grow by 5.3% in 2021. An improving labour market and high levels of household savings will support consumption and, as vaccinations continue, pent-up demand will return for in-person services. Depleted inventories will be rebuilt and the upswing in commodity prices will support new investment.
Inflation is expected to fall steadily from recent peaks toward the mid-point of the target range by end-2022. After jumping to 99% of GDP in 2020, public debt is expected to drop sharply to 92% of GDP in 2021 and remain around that level over the medium term. Uncertainty around the outlook is exceptionally high but risks to growth are viewed as being broadly balanced. ■