Minister of Finance comments on IMF decision to reduce economic growth forecast

In comments made at a conference of the Order of Economists on Monday (August 22), minister of Finance, Guido Mantega, declared that if the International Monetary Fund does lower its forecast for international economic growth this year, as expected, it is possible that Brazil will also reduce its estimate for Brazilian growth in 2011.

“The fact is that if the world slows down, Brazil will slow down as well. If there is a worldwide reduction in economic activity, levels of growth in emerging nations will be lower,” said the minister. “There will be consequences. The prices of commodities will drop if there is lower demand. That means less exports for emerging nations.”

However, Mantega emphasized that at the moment Brasilia was not going to lower growth expectations. “The forecast was for worldwide growth of 4.4%, that is, the expected average GDP growth of advanced and emerging nations. But now it seems the IMF will lower that. We have to be on alert. What we as a nation have to do is counterbalance the tendency toward lower growth by taking steps to ensure we continue growing, that our production rates do not fall,” said the minister.

According to Mantega, Brazil can grow 4.5% this year. “We have a series of advantages. A deep stockpile of reserves, a solid banking system and a strong domestic market. We also depend less than others on exports. For example, fully 40% of China’s GDP depends on exports. Our exports account for only 13% of GDP.”