Despite recession, IMF congratulates Brazil on economic choices

Vendors in the streets of Sao Paulo, September 1, 2020. -

The figure is bad but ultimately less than previously anticipated.

Brazil's economy is expected to contract 5.8 percent in 2020, according to forecasts from the International Monetary Fund (IMF).

It is therefore a less pessimistic projection than in June when the organization forecast a drop of 9.1% of the gross domestic product (GDP).

A partial recovery in 2021

According to the Fund, Brazil should then "experience a partial recovery with growth of 2.8% in 2021".

In its annual report on the largest economy in Latin America, the IMF praises the response of the Brazilian authorities to the crisis linked to the consequences of the coronavirus pandemic.

"Strong policies avoided a deeper recession, stabilized financial markets and cushioned the effects of the pandemic on the poorest and most vulnerable."

According to the report, the sharp increase in the primary budget deficit is expected to bring debt to almost 100% of GDP in 2020 and the latter is expected to remain at a high level over the medium term.

The IMF says the dangers to the economy remain "high and multifaceted", in particular the risk of a second wave of the epidemic, the long-term consequences of a prolonged recession and lower investor confidence, account given the high level of debt.

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