NEW YORK — Latin America’s largest economy is set to grow 5.3% in 2021 on the back of an improving labor market and consumer consumption, according to the International Monetary Fund.
“An improving labor market and high levels of household savings will support consumption and, as vaccinations continue, pent-up demand will return for in-person services,” the multilateral lender said today in a statement after announcing the conclusion of the Article IV consultation.
“Economic performance has been better than expected, in part due to the authorities’ forceful policy response,” the IMF said. The economy regained pre-pandemic level in 2021Q1 while “momentum continues to be favorable, supported by booming terms of trade and robust private sector credit growth.”
With Brazil’s central bank set to deliver another Selic rate increased today, according to analysts, the IMF expects inflation to fall “steadily from recent peaks toward the mid-point of the target range by end-2022.”
After jumping to 99% of gross domestic product in 2020, public debt is expected to drop sharply to 92% of GDP this year and remain around that level over the medium-term, the IMF said. “Uncertainty around the outlook is exceptionally high but risks to growth are viewed as being broadly balanced.”