{
  "title": "IMF Executive Board Concludes 2024 Article IV Consultation with Brazil",
  "publication": "IMF News, July 11, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/07/11/pr24268-brazil-imf-exec-board-concludes-2024-art-iv-consult",
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  "summary": "Washington, DC – July 8, 2024: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Brazil.",
  "publishDate": "2024-07-11",
  "sections": [
    {
      "heading": "Overview and near-term outlook",
      "content": "- The Executive Board concluded the Article IV consultation with Brazil.\n- Real GDP growth in 2023: 2.9 percent (driven by record agricultural and hydrocarbon output, and resilient services).\n- Growth projected for 2024: 2.1 percent (factors: still restrictive monetary policy, a lower fiscal deficit, the flood calamity in Rio Grande do Sul, and the normalization of agricultural output).\n- Medium‑term growth projection: 2.5 percent (an upward revision of 0.5 percentage point since the 2023 Article IV Consultation, supported by efficiency gains from the VAT reform and growing hydrocarbon output).\n- Headline inflation: expected to return to the 3 percent target in the first half of 2026."
    },
    {
      "heading": "Balance of risks",
      "content": "- Board view: balance of risks improved since the 2023 Article IV Consultation but remains somewhat tilted to the downside; uncertainty persists.\n- Downside risks:\n  - Possible monetary policy miscalibration in major economies.\n  - Commodity price volatility.\n  - Global financial instability.\n  - More severe domestic supply disruptions from the 2024 flood calamity.\n  - Uncertainty over fiscal measures reducing policy credibility, raising borrowing costs, and increasing risk of inflation expectations de‑anchoring.\n- Upside risks:\n  - Stronger‑than‑expected household consumption.\n  - Faster implementation of productivity‑enhancing reforms.\n  - Investment in green growth opportunities.\n- Resilience factors:\n  - Sound financial system.\n  - Adequate FX reserves.\n  - Low reliance on FX debt.\n  - Large government cash buffers.\n  - Flexible exchange rate."
    },
    {
      "heading": "Executive Board Assessment and policy recommendations",
      "content": "- Commendations:\n  - Remarkable resilience during the disinflation process.\n  - Progress advancing an ambitious agenda for sustainable and inclusive growth.\n  - Authorities’ commitment to improving the fiscal position and the VAT reform.\n  - Decisive efforts to bring down inflation and careful pace of monetary policy easing consistent with the inflation targeting framework.\n  - Flexible exchange rate regime and adequate FX reserves as shock buffers.\n  - Progress on financial inclusion, efficiency, competition, and financial innovation.\n  - Progress on Brazil’s Ecological Transformation Plan, commitment to halt illegal deforestation, new carbon market framework, and instruments to attract longer‑term green financing.\n- Fiscal recommendations:\n  - Sustain and pursue a more ambitious fiscal effort to put public debt on a firmly downward path and open space for priority investments.\n  - Broaden the tax base, rationalize inefficient tax expenditures, tackle budget rigidities, and enhance efficiency of social transfer programs.\n  - Strengthen the fiscal framework with a strong medium‑term fiscal anchor to reinforce credibility and sustainability.\n- Monetary recommendations:\n  - Maintain flexibility on the pace and length of the easing cycle.\n  - Preserve credibility of the monetary policy framework and the 3‑percent inflation target.\n- Financial sector recommendations:\n  - Continue strengthening oversight of non‑bank financial institutions.\n  - Address households’ debt burden and lower credit costs.\n  - Carefully manage a bigger role for public banks to mitigate risks to the fiscal position, monetary policy transmission, and market efficiency.\n  - Provide the Central Bank of Brazil (BCB) with flexibility to cover operating expenses to support technological innovations.\n- Structural and environmental recommendations:\n  - Advance trade integration, strengthen anti‑corruption and AML/CFT frameworks, and facilitate skills upgrading to raise potential growth.\n  - Continue implementing the Ecological Transformation Plan and instruments to attract green financing."
    },
    {
      "heading": "Key quantitative projections and indicators (selected from Table 1)",
      "content": "- Population (2023): Total (millions) 216.3; Annual rate of growth (percent) 0.7; Density (per sq. km.) 25.4.\n- GDP:\n  - GDP, local currency (2023): R$10,856 billion.\n  - GDP, dollars (2023): US$2,174 billion.\n  - GDP per capita (2023): US$10,050.\n- Labor and social:\n  - Unemployment rate (Q1, 2024): 7.9.\n  - Life expectancy at birth (years): 75.5.\n  - Poverty rate (in percent, 2022): 31.6.\n- Inflation and prices:\n  - Consumer prices (IPCA, average): 2022: 9.3; 2023: 4.6; 2024 (Proj.): 4.0; 2025 (Proj.): 3.2.\n  - Consumer prices (IPCA, end of period): 2023: 5.8.\n  - GDP deflator: 2022: 8.5; 2023: 4.7; 2024 (Proj.): 5.0; 2025 (Proj.): 3.5.\n- Real activity (annual percentage change, GDP at constant prices):\n  - 2022: 3.0; 2023: 2.9; 2024 (Proj.): 2.1; 2025 (Proj.): 2.5.\n- Investment and saving:\n  - Investment (GFCF) growth: 2022: 1.1; 2023: -3.0; 2024 (Proj.): 0.8; 2025 (Proj.): 0.9.\n  - Gross national saving (percent of GDP): 2022: 19.2; 2023: 21.9; 2024 (Proj.): 20.5.\n- Public finances:\n  - Central government primary balance (national representation, incl. BCB) 4/: 2022: -3.6; 2023: -7.2; 2024 (Proj.): -6.4; 2025 (Proj.): -6.3; 2026 (Proj.): -5.5; 2027 (Proj.): -5.1; 2028 (Proj.): -4.6; 2029 (Proj.): -4.2.\n  - Net public sector debt: 2022: 56.1; 2023: 60.9; 2024 (Proj.): 61.4; 2025 (Proj.): 65.9; 2026 (Proj.): 68.3; 2027 (Proj.): 70.0; 2028 (Proj.): 71.1; 2029 (Proj.): 71.8.\n  - General government gross debt, Authorities’ definition: 2022: 71.7; 2023: 74.4; 2024 (Proj.): 77.1; 2025 (Proj.): 80.5; 2026 (Proj.): 82.1; 2027 (Proj.): 83.4; 2028 (Proj.): 84.0; 2029 (Proj.): 84.3.\n  - General government gross debt: 2022: 83.9; 2023: 84.7; 2024 (Proj.): 87.5; 2025 (Proj.): 91.2; 2026 (Proj.): 93.1; 2027 (Proj.): 94.5; 2028 (Proj.): 95.1; 2029 (Proj.): 95.4.\n- External sector (Billions of U.S. dollars, unless otherwise specified):\n  - Trade balance: 2022: 44.2; 2023: 80.6; 2024 (Proj.): 78.2; 2025 (Proj.): 80.4; 2026 (Proj.): 90.0; 2027 (Proj.): 100.9.\n  - Exports: 2022: 340.3; 2023: 344.4; 2024 (Proj.): 345.6; 2025 (Proj.): 350.4; 2026 (Proj.): 357.1; 2027 (Proj.): 369.3; 2028 (Proj.): 380.1; 2029 (Proj.): 391.7.\n  - Imports: 2022: 296.2; 2023: 263.8; 2024 (Proj.): 267.4; 2025 (Proj.): 270.0; 2026 (Proj.): 273.8; 2027 (Proj.): 279.3; 2028 (Proj.): 284.7; 2029 (Proj.): 290.8.\n  - Current account: 2022: -48.3; 2023: -30.8; 2024 (Proj.): -40.0; 2025 (Proj.): -40.8; 2026 (Proj.): -42.9; 2027 (Proj.): -44.7; 2028 (Proj.): -45.5; 2029 (Proj.): -47.4.\n  - Foreign direct investment (net inflows): 2022: 41.3; 2023: 36.0; 2024 (Proj.): 37.2; 2025 (Proj.): 38.7; 2026 (Proj.): 40.3; 2027 (Proj.): 41.8; 2028 (Proj.): 43.4; 2029 (Proj.): 45.1.\n  - Total external debt (in percent of GDP): 2022: 34.9; 2023: 33.7; 2024 (Proj.): 32.6; 2025 (Proj.): 32.3; 2026 (Proj.): 31.0; 2027 (Proj.): 28.6; 2028 (Proj.): 27.5.\n- Memorandum items:\n  - Output Gap: 2022: 0.4; 2023: 0.2; 2024 (Proj.): 0.0.\n  - Current account (in percent of GDP): 2022: -2.5; 2023: -1.4; 2024 (Proj.): -1.8; 2025 (Proj.): -1.7; 2026 (Proj.): -1.6.\n  - Unemployment rate 7/: 2022: 7.6; 2023: 7.4; 2024 (Proj.): 7.5.\n  - Gross official reserves (in US$ billions): 2022: 325; 2023: 355.\n  - REER (annual average in percent; appreciation +): 2022: 12.1.\n- Selected social and health indicators:\n  - Agricultural land (percent of land area): 30.2.\n  - Physicians per 1000 people (2023): 2.6.\n  - Hospital beds per 1000 people (2023) 1/: 2.4.\n  - Access to safe water (2022): 88.0.\n  - Net enrollment rates, percent in primary education: 99.4; secondary education: 92.2.\n  - Adult illiteracy rate: 5.4.\n  - Infant mortality (per thousand live births): 12.6.\n  - Palma ratio 3/: 3.6.\n  - Gini coefficient (post taxes and transfers): 51.8.\n  - Main export products: airplanes, metallurgical products, soybeans, automobiles, electronic products, iron ore, coffee, and oil.\n\nSource: IMF Press Release No. 24/268 — IMF Executive Board Concludes 2024 Article IV Consultation with Brazil.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Brazil and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/07/11/pr24268-brazil-imf-exec-board-concludes-2024-art-iv-consult"
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    "Published: July 11, 2024",
    "The Executive Board concluded the Article IV consultation with Brazil.",
    "Real GDP growth in 2023: 2.9 percent (driven by record agricultural and hydrocarbon output, and resilient services).",
    "Growth projected for 2024: 2.1 percent (factors: still restrictive monetary policy, a lower fiscal deficit, the flood calamity in Rio Grande do Sul, and the normalization of agricultural output).",
    "Medium‑term growth projection: 2.5 percent (an upward revision of 0.5 percentage point since the 2023 Article IV Consultation, supported by efficiency gains from the VAT reform and growing hydrocarbon output).",
    "Headline inflation: expected to return to the 3 percent target in the first half of 2026.",
    "Board view: balance of risks improved since the 2023 Article IV Consultation but remains somewhat tilted to the downside; uncertainty persists.",
    "Downside risks:",
    "Upside risks:",
    "Resilience factors:",
    "Commendations:",
    "Fiscal recommendations:",
    "Monetary recommendations:",
    "Financial sector recommendations:",
    "Structural and environmental recommendations:",
    "Population (2023): Total (millions) 216.3; Annual rate of growth (percent) 0.7; Density (per sq. km.) 25.4.",
    "GDP:",
    "Labor and social:",
    "Inflation and prices:",
    "Real activity (annual percentage change, GDP at constant prices):",
    "Investment and saving:",
    "Public finances:",
    "External sector (Billions of U.S. dollars, unless otherwise specified):",
    "Memorandum items:",
    "Selected social and health indicators:",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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