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The Brazilian economy will contract by 1.3 percent in 2009, due to impacts of the global financial crisis, according to the World Economic Outlook report released on Wednesday by the International Monetary Fund (IMF).
The contraction will be the worst since a 4.2 percent shrink registered in 1990 in the country. Last year, the Brazilian economy grew 5.1 percent, despite impacts of the global financial crisis.
The IMF's revised projection is much more pessimistic than the previous one released in January, which foresaw a growth of 1.8 percent in 2009.
The IMF said that several measures taken by the Brazilian government will contribute minimizing impacts of the financial crisis on the country, but they are not enough to avoid a minus GDP growth.
According to the IMF, there are several factors related to the crisis that have lead to the fall of the Brazilian economy, including decrease in exports, commodity price declines and the unfavorable financing conditions in external markets.
The stress in the financial sector and the deleveraging of the developed economies are increasing the costs of loans and halting capital flow to countries in Latin America and the Caribbean, the IMF said.
Despite the struggles, the IMF said, Brazil will not be as deeply affected as other countries in Latin America, such as Mexico, whose GDP is expected to contract by 3.7 percent.
The report projected that Latin American economies will shrink by 1.5 percent, in terms of the GDP, in 2009, and that the global economy will fall 1.3 percent. In 2010, the Brazilian economy is expected to grow 2.2 percent, while Latin America is expected to grow 1.6 percent, and the global economy, up 1.9 percent. |
