IMF Reduces Growth Forecast for Brazil; Job Creation is Worst in Ten Years

01/22/2014 - 09h54

The IMF reduced its growth forecast for Brazil in 2014 and 2015.

According to the IMF´s World Economic Outlook report which raises the global growth forecast, Brazil is set to grow 2.3% (revised from 2.5%) and 2.8% (revised from 3.2%) in 2014 and 2015 respectively. The report was released this morning.

The global economy is expected to grow 3.7% this year and 3.9% the next. According to the study growth in the United States looks "increasingly solid" and will be greater than Brazil´s over the next two years: 2.8% in 2014 and 3% in 2015.

China will moderate its growth at 7.5% this year and 7.3% the next. But the IMF says Chinese growth is still heavily driven by public investment as opposed to consumption.

The report also says that China needs to contain risks in its financial sector without reducing growth excessively. A "delicate balancing act" according to the study.

Emerging economies will be exposed to risks associated with capital flight towards the United States at the prospect of the US reducing its money creation (putting fewer dollars on the market) and higher interest rates.

But the Fund says that emerging markets will benefit from the economic recovery of richer nations.

EMPLOYMENT

Brazil created 1.1 million formal jobs in 2013, according to data collected by the General Records Office for Employed and Unemployed Workers (CAGED) and provided by the Ministry of Labour on Tuesday.

Job openings decreased 18.6% compared to the same time last year when 1.3 million jobs were created.

This is the worst outcome since 2003, well below the government´s goal of creating 1.4 million new jobs.

"Our GDP did not grow much. Job creation can´t contradict reality," said Brazil´s Labour Minister, Manoel Dias.

Translated by MILLI LEGRAIN

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	Laurent Gillieron/Efe
	According to the IMF´s World Economic Outlook report, Brazil is set to grow 2.3% this year