Analysis: With war on the radar, IMF reduces global growth forecast

The International Monetary Fund (IMF) revised downwards its global growth forecast for 2026, reducing the estimate to 3.0%, with a projection of 3.4% for 2027. At the same time, the organization raised the growth outlook for Brazil, in a move that analysts attribute, in large part, to the behavior of the oil market. CNN Economics editor and analyst Lucinda Pinto comments on the matter.

According to Lucinda, the conflict in the Middle East and its effects on oil prices are at the center of the reviews made by the IMF, both for the global economy and for Brazil.

"Ultimately, the IMF is attributing these growth revisions for the world and for Brazil to the same reason, which is really the behavior of oil," he stated.

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Brazil benefits from rising oil
For Brazil, the IMF raised its growth projection from 1.9% to 2.4% in 2026, with an estimate of 2.2% for 2027. As the country is a net oil exporter, the higher average price of the commodity throughout the year tends to benefit the national economy.

In addition to oil, the fund cites a stronger than expected agricultural harvest and more resilient consumption than initially imagined as factors contributing to the more positive scenario.

Scenario based on transitory factors
Lucinda Pinto highlighted, however, that this optimism has fragile foundations.

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"What we are seeing here is that this slightly more positive scenario from the IMF is based on transitory factors. It is not pointing to a structural improvement in the economy, it is seeing factors that will give a boost at least in the short term", explained the analyst.

Another highlighted point is that the IMF does not emphasize the effect of the increase in interest rates on the Brazilian economy.

While the fund projects 2.4% growth for Brazil, market economists work with much lower estimates - projections of around 1.6%, and the Focus survey points to growth of 1.8% for next year, precisely due to the higher Selic rate. "The fund doesn't deal much with this aspect", observed Lucinda Pinto.

On the international scene, the analyst also pointed out that the IMF report relativizes the effects of tariffs imposed by the American government. According to her, "the risks are not as clear as to what this could bring to the countries, both for the American economy and for the industries that feel the effects of the tariff."

Lucinda Pinto also recalled that, historically, the IMF tends to be more optimistic in its economic growth projections compared to market estimates.

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Source: CNN