Brazil’s government keeps its 2025 GDP growth forecast at 2.3% while raising inflation estimates to 4.9%. Central bank to hike interest rates amid inflation concerns. Projections for 2026 indicate a growth rate of 2.5% and inflation at 3.5%.
Brazil’s government has retained its GDP growth forecast for 2025 at 2.3%. Despite this stability, the government has revised its inflation estimate upward to 4.9%, slightly higher than the previous 4.8% reported in February. This change is attributed to minor adjustments in the economic outlook, particularly as growth in the latter half of the year is expected to decline following a stronger performance in the first quarter.
The finance ministry indicated that Brazil’s central bank is engaged in a rigorous cycle of monetary tightening to temper inflation, with expectations for a consecutive interest rate increase to 14.25%. Additionally, while there are anticipations for slowing food price inflation by the year’s end, the cost of industrial goods is predicted to rise.
The report notes that protectionist policies, particularly those enacted by the U.S., could exacerbate inflationary pressures in Brazil. However, it also mentions that increased uncertainty may have a counteractive effect on economic activity. The ministry has also projected initial forecasts for 2026, predicting a GDP growth of 2.5% and inflation tapering to 3.5%. Continued growth at similar rates is expected into future years, with inflation anticipated to align closer to the central bank’s target of 3% from 2027 onward.
In summary, Brazil’s government maintains a stable GDP growth forecast for 2025 at 2.3%, while inflating concerns rise slightly to 4.9%. The central bank is expected to continue raising interest rates in response to inflation, driven partially by external protectionist measures. Looking ahead to 2026, projections suggest modest economic growth and a decrease in inflation rates.
Original Source: money.usnews.com
