Brazil’s Central Bank Raises 2024 GDP Forecast to 3.2%
Brazil’s Central Bank has increased its 2024 economic growth forecast to 3.2%, matching the expectations of the Finance Ministry.
The bank’s previous estimate in June stood at 2.3%. Despite this positive outlook, the Central Bank anticipates a slowdown in economic growth for 2025.
The upward revision stems from an unexpectedly strong performance in the second quarter of 2024. However, the bank expects a slower pace of growth in the latter half of the year.
This deceleration is projected to continue into 2025, with an estimated growth rate of 2.0%. Several factors contribute to the anticipated slowdown.
These include reduced fiscal stimulus and a pause in monetary easing that began in 2023. Additionally, the bank cites diminished production capacity and a lack of strong external economic drivers.
Sector-specific projections reveal varied growth patterns. The agricultural sector is expected to contract by 1.6% in 2024 before rebounding with 2.0% growth in 2025.
Industrial output is forecast to expand by 3.5% in 2024 and 2.4% in 2025. The services sector is projected to grow by 3.2% in 2024 and 1.9% in 2025.
The Central Bank notes that economic activity continues to expand robustly. The labor market remains strong, potentially exerting inflationary pressures.
Inflation projections have risen across all time horizons compared to June’s analysis, moving further from the target. Several factors have contributed to the increased inflation forecast.
These include stronger-than-expected economic activity, currency depreciation, and rising inflation expectations. The bank emphasizes its commitment to bringing inflation back to the target range.
The probability of inflation exceeding the upper tolerance limit has increased for both 2024 and 2025. The Central Bank remains vigilant, monitoring economic scenarios closely to guide future monetary policy decisions.
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