Brazil’s Ministry of Finance has revised its economic outlook for 2024. The Secretariat of Economic Policy (SPE) now predicts a 3.3% growth in Gross Domestic Product (GDP).
This is a slight increase from the previous 3.2% forecast. The adjustment reflects minor changes in economic indicators. The SPE expects a 0.7% growth in the third quarter of 2024.
This is up from the earlier 0.6% projection. The increase stems from improved estimates in the agriculture and services sectors. However, experts expect the overall pace of economic activity to slow down moderately.
For 2025, the GDP growth forecast remains unchanged at 2.5%. Despite anticipated increases in interest rates, improved projections for grain harvests and extractive production offset potential negative effects.
This balance maintains the growth outlook for 2025. Experts have raised inflation projections for 2024. The National Consumer Price Index (IPCA) is now expected to reach 4.40%, up from the previous 4.25% forecast.
This figure approaches the upper limit of Brazil’s inflation target. The SPE anticipates a deceleration in regulated prices towards the end of 2024.
Brazil’s Inflation Outlook
This is mainly due to expected changes in electricity tariff flags. However, free market prices are likely to continue rising. This increase reflects volatile items affected by exchange rates and weather conditions.
From November 2024, the SPE expects the 12-month accumulated inflation to start declining. This projection assumes a green flag for electricity tariffs in December.
However, potential climate events could impact this forecast. Rising beef prices and their influence on other animal protein costs pose a risk to inflation projections.
On the positive side, a favorable 2025 harvest outlook and the possibility of a mild La Niña could help reduce food and energy inflation.
For 2025, the inflation forecast has been revised from 3.40% to 3.60%. This adjustment accounts for inertial effects, expected increases in animal protein prices, and recent currency depreciation impacts.
The projection no longer includes the effects of a change from yellow to green electricity tariff flags. The Ministry of Finance expects the disinflation process to continue in the coming years.
They anticipate a slowdown in both free and regulated prices. For subsequent years, experts expect the IPCA to align with the 3% target.
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