Brazil maintains its 2025 GDP growth forecast at 2.3%, raises inflation estimate to 4.9%. The economy is expected to slow in the second half, with central bank tightening measures in response to inflation. Initial 2026 forecasts project 2.5% growth and 3.5% inflation.
Brazil’s government has maintained its GDP growth forecast for 2025 at 2.3%, while slightly adjusting its inflation prediction upwards to 4.9%, from the prior estimate of 4.8% made in February. The finance ministry indicated that the economy is likely to see growth slow down in the latter half of the year following a robust first quarter of activity.
Amid these forecasts, Brazil’s central bank is actively pursuing a monetary tightening strategy to manage inflation. It is widely anticipated that the bank will implement a third consecutive interest rate increase of 100 basis points, bringing the rate to 14.25% later today.
Additionally, the government expects inflationary pressures to stem from rising food prices, which are set to slow by year-end, contrasted with increasing costs in industrial goods. The finance ministry cited U.S. tariff policies as a factor that contributes to inflation but believes the overall effect may be lessened due to uncertainties affecting economic activity.
Looking ahead, initial forecasts for 2026 indicate an anticipated GDP growth of 2.5%, while inflation is predicted to decrease to 3.5%. These growth estimates are expected to persist in the upcoming years, aligning inflation nearer to the central bank’s target of 3% starting in 2027.
In summary, Brazil’s government has upheld its GDP growth forecast at 2.3% for 2025 while slightly raising inflation expectations to 4.9%. Central bank actions, including further interest rate hikes, are implemented to control inflation influenced by external factors like U.S. tariffs. The government also projects modest growth and reduced inflation for 2026, expecting stability in subsequent years.
Original Source: www.marketscreener.com
