Brazil’s government maintains a 2025 GDP growth forecast of 2.3% and raises inflation estimates to 4.9%, citing minor adjustments. An aggressive monetary tightening is expected to combat inflation, as the central bank plans a third interest rate hike. Preliminary forecasts for 2026 include a growth rate of 2.5% and inflation expected to decrease to 3.5%.
On Wednesday, Brazil’s government reaffirmed its 2025 GDP growth forecast at 2.3%, while slightly adjusting its inflation projection upwards due to minor changes in its economic outlook. The finance ministry’s economic policy secretariat indicated that the GDP growth of Brazil, the largest economy in Latin America, is expected to decelerate during the second half of the year following a robust first quarter.
As part of its efforts to manage inflation, Brazil’s central bank is expected to implement a third consecutive interest rate increase of 100 basis points, raising the rate to 14.25%. This decision is part of an aggressive monetary tightening strategy aimed at stabilizing prices. Consequently, the government has updated its inflation forecast for the year to 4.9%, rising from 4.8% previously estimated in February, anticipating a slowdown in food prices balanced by rising costs of industrial goods.
The government commented, “Rising protectionism tends to pressure inflation,” referencing the effects of U.S. President Donald Trump’s tariff policies. Despite this, they suggested that increased uncertainty could counteract these inflationary pressures. Additionally, the finance ministry provided preliminary forecasts for 2026, projecting a growth rate of 2.5% along with an expected inflation rate decrease to 3.5%. They noted that growth is likely to remain around 2.5% for several years and inflation is anticipated to align with the central bank’s target of 3% starting in 2027.
In conclusion, Brazil’s government has retained its GDP growth forecast for 2025 at 2.3% while adjusting the inflation estimate to 4.9%. The central bank’s monetary policies are focused on curbing inflation, with expectations of further interest rate hikes. Looking ahead, growth is projected to rise to 2.5% in 2026, with inflation anticipated to decrease towards the central bank’s target in the coming years.
Original Source: www.marketscreener.com
