Finance Minister: IMF's prediction for Brazil's GDP pessimistic

Brazil's Finance Minister Guido Mantega described as pessimistic the predicted growth of 0.3% of the Brazilian economy this year, released today (Oct 7) by the International Monetary Fund (IMF). In his view, a recovery of economic activities in the second semester will lead the country to close out 2014 with a higher expansion rate.

According to the minister, the FMI's estimates were influenced by the low increase in global economy, which has been marked by the slow-paced resumption in the US economy and Europe's small growth. He also believes that the poor performance observed in the first semester interfered in the projection.

“The fund's forecast seems pessimistic. We've had a poorer first semester, but we're seeing a recovery in the Brazilian economy in the second half of the year. As of July, we've experienced a moderate acceleration in growth,” Mantega declared.

Officially, the Brazilian government predicts a 0.9% surge in the nation's 2014 gross domestic product (GDP). Mantega states that the estimate will be kept unchanged up to the end of November, when the Ministry of Planning is due to release a document with predictions for the Federal Budget.

The ministry mentioned a number of indicators that show a recovery in production and consumption. He says car sales leapt 13.7% in September and supermarket sales increased 2.53% above the inflation in August.

Mantega further notes that another factor contributing to the low growth seen in the first semester was the interest rates, raised by the Central Bank (BC). But, the minister declares, the stabilization of price indexes allowed BC to announce measures for expanding credit, like reducing banks' mandatory deposit.

While highlighting the stagnation of the global economy, the minister emphasized the international economic scenario, which was played a more significant role in the IMF's predictions than did domestic factors, he says. “Of the advanced economies, only the US and the UK are growing. Japan stopped growing, and is facing difficulties. Some people want to attribute these phenomena to Brazilian problems, when they're really global problems,” he argued.

Mantega declared that the government is to bring the economy to a solid position by the end of the year, with a lower foreign debt and copious international reserves, coupled with a minimized unemployment rate.

Translated by Fabrício Ferreira

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