Brazil maintains its 2025 GDP growth forecast at 2.3% but raises the inflation estimate to 4.9%. The central bank is expected to continue raising interest rates to combat inflation amidst global protectionism. Initial forecasts for 2026 predict a growth of 2.5% and inflation decreasing to 3.5%.
On Wednesday, Brazil’s government announced it would maintain its 2025 GDP growth forecast at 2.3%, while slightly increasing its inflation estimate to 4.9%. This adjustment arises from marginal changes in the economic outlook, particularly as the economy is expected to slow in the year’s second half following a robust expansion during the first quarter.
Brazil’s Central Bank is actively implementing a strict monetary policy, with expectations of a third consecutive 100-basis-point interest rate hike, bringing the rate to 14.25%. The finance ministry highlighted that despite a potential slowdown in food prices, industrial goods costs are anticipated to rise.
Furthermore, the finance ministry pointed to rising global protectionism, particularly referencing U.S. tariffs, which could exert inflationary pressures. However, they noted that heightened uncertainty might dampen economic activity, potentially offsetting some inflationary effects.
Initial economic forecasts for 2026 project a slight growth increase to 2.5% with inflation expected to decrease to 3.5%. The ministry indicated that they foresee growth rates around 2.5% in subsequent years, with a return to the central bank’s 3% inflation target by 2027.
In summary, Brazil’s government affirms its 2025 GDP growth estimate at 2.3% while slightly adjusting the inflation forecast upward to 4.9%. The central bank’s monetary tightening aims to control inflation amid rising global protectionism. Future projections anticipate a growth rate increase to 2.5% for 2026 and a decline in inflation towards the 3% target by 2027.
Original Source: money.usnews.com
