Brazil’s government has maintained its 2025 GDP growth forecast at 2.3% while increasing its inflation estimate to 4.9%. The economic growth is expected to slow in the second half of the year, amidst aggressive monetary tightening by the central bank. Initial forecasts for 2026 predict growth of 2.5% and inflation slowing to 3.5%.
Brazil’s government has maintained its 2025 GDP growth forecast at 2.3%, while revising its inflation estimate upward to 4.9% from 4.8%. This adjustment stems from slight modifications in the base case scenario, as highlighted by the finance ministry’s economic policy secretariat. In their report, they indicated that economic growth is likely to decelerate in the latter half of the year after a strong first quarter.
This announcement coincides with Brazil’s central bank’s aggressive monetary tightening measures aimed at curbing inflation. Analysts expect a third consecutive interest rate hike of 100 basis points, raising the rate to 14.25%. The government predicts that food price increases will slow by the year’s end, though industrial goods prices are expected to rise.
The finance ministry emphasized that rising protectionist policies, particularly those linked to U.S. tariffs, could apply upward pressure on inflation. However, they noted that these effects may be offset by a heightened level of uncertainty impacting economic activity. Furthermore, initial forecasts for 2026 suggest a projected growth rate of 2.5% with an anticipated decrease in inflation to 3.5%. The government noted long-term growth expectations of around 2.5% and an inflation rate aligning closer to the central bank’s target of 3% starting in 2027.
The Brazilian government’s sustained GDP growth prediction coupled with a slight uptick in inflation reflects ongoing economic challenges. The expected aggressive monetary policy actions may influence economic dynamics in the short term. The long-term outlook remains cautiously optimistic with projected growth and a return to more stable inflation estimates.
Original Source: money.usnews.com
