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IMF improves regional growth forecast

The International Monetary Fund (IMF) has revised upwards the economic growth prospects for Latin America in 2016 and 2017.

In the report published in July 2016, the IMF predicts that the United Kingdom’s exit from the European Union could cost the world a tenth of its increase in wealth, but even so, Latin America could return to growth in 2017, at a rate of 1.6%. According to the organization, the average contraction predicted for the region in the current year is 0.4%, contrary to the 0.5% previously estimated.

The most optimistic perspectives that the IMF presents are mostly related to the recovery of the Brazilian economy, whose numbers could increase by five tenths. The revised values tell us that economic developments in Brazil will be -3.3% in 2016, but 0.5% in 2017.

Mexico also expects growth of 2.5%, a tenth more than expected three months ago. For next year, the outlook remains at 2.6%.
In the report, the IMF is concerned about issues related to climate change and natural phenomena, such as the Zika virus, and the consequences that these could bring to all of Latin America and the Caribbean.
Although the region is not directly affected by “Brexit”, the IMF declares that “the result obtained in the vote in the United Kingdom surprised global financial markets and therefore there is a huge downside risk for the global economy.”

The IMF also warns that the effects of “Brexit” could prove to be more negative than described in the report, as the uncertainty arising from the situation in the United Kingdom makes macro-economic forecasts much more difficult.
In relation to China, the Fund estimates that growth will increase in 2016, reaching 6.6%, and for 2017 the previous forecast of 6.2% remains.

In the Eurozone, growth is expected to increase by a tenth in 2016 but reduce by two in 2017. Specifically, in Spain – which is expected to grow by around 2.6% this year, without yet feeling the effects of “Brexit” – the IMF already tells us that the Growth in 2017 is not expected to exceed 2.1%, two tenths less than previously forecast.
In a more general context, the Fund reduced the growth of the world economy to 3.1% and 3.4%, respectively for these two years, despite the results obtained in the first quarter being better than expected.