The Organization for Economic Cooperation and Development (OECD) predicts that Brazil’s economy will contract 0.5 percent in 2015, according to a report released on Wednesday.
The figure, presented in an economic update compiled by the Paris-based agency, represents a downward adjustment of its earlier November forecast, which projected 1.5-per cent growth for the South American giant.
Brazil, the only country of the 11 listed to expect a contraction, is also projected to struggle in 2016, with predicted growth of 1.2 per cent, down from the 2 per cent forecast in November and the lowest growth rate of the countries listed.
The OECD’s figures are similar to those forecast by Brazil’s financial market, which revised its earlier growth forecast on Monday, saying the economy will contract 0.78 per cent.
The country’s government has admitted that the economy may come to a recession, but has issued no figure.
Brazil’s 2014 growth rate will be reported on March 27, and is expected to register a drop of 0.15 per cent.
Meanwhile, the OECD forecast said the Indian economy will grow 7.7 per cent in 2015 and 8 per cent in 2016. OECD’s upward revision for India is due to a revamp in India’s GDP numbers that has bumped up growth from what was earlier estimated under the factor cost method. It has warned however, that obstacles have emerged to reforms by the Narendra Modi-led government, highlighting tough choices ahead.
China is pegged to grow at 7 per cent in both these years.
The OECD projects that the US will grow by 3.1 per cent this year and by 3 per cent in 2016, while the UK is projected to grow at 2.6 per cent in 2015 and 2.5 per cent in 2016.
“Lower oil prices and widespread monetary easing have brought the world economy to a turning point, with the potential for the acceleration of growth that has been needed in many countries,” said OECD Chief Economist Catherine L. Mann. “There is no room for complacency, however, as excessive reliance on monetary policy alone is building-up financial risks, while not yet reviving business investment.”
The OECD tracks its 34 advanced economy members, in addition to issuing forecasts and surveys of large non-member countries like India.
TBP and Agencies