Brazil’s Economy Stalls in Q3 As High Rates Choke Demand While Exports Carry The Load

Brazil’s latest reading from Fundação Getulio Vargas’ Monitor do PIB points to an economy barely moving. Output grew just 0.1% in the third quarter of 2025 compared with the previous three months and was essentially flat between August and September.

Year on year, activity in the third quarter was up 1.5%, and GDP over the 12 months to September rose 2.5%, a clear slowdown after 3.5% growth in 2024.

The stagnation is broad-based. On the supply side, services fell 0.3% from August to September and were flat over the quarter. Industry slipped 0.5% in September, managing only a 0.7% rise in the quarter.

Investment, measured by Gross Fixed Capital Formation, dropped 1.4% in September and 1.4% in the quarter, and was down 0.4% compared with the same period in 2024.

On the demand side, household consumption fell 0.5% month on month and 0.1% in the quarter, growing a meagre 0.2% versus a year earlier after much stronger gains in previous years.

Durable goods have been shrinking for around two quarters, a predictable casualty when credit is expensive. Capital goods producers, heavily dependent on working-capital loans, are feeling the same squeeze.

Brazil growth depends on exports amid high rates

The main culprit is the macro environment. Brazil’s benchmark Selic rate stands at 15% a year, the highest level since 2006 after a long tightening cycle to contain inflation.

At that cost of money, many families postpone purchases and companies shelve projects, however much officials talk about growth. What “saved” the September reading were exports.

Foreign sales were stable between August and September but rose 3.3% in the quarter and 7% year on year, with about 44% of that momentum coming from the mineral-extractive sector. Imports climbed 3.8% over the same yearly comparison.

Brazil has partly “swapped markets”, redirecting shipments away from the United States after Washington’s steep tariff hikes toward other long-standing partners.

FGV’s Monitor, an advance indicator for the official GDP that IBGE will publish on 4 December, suggests that, with trade cushioning weak domestic demand, overall growth in 2025 could still end up close to the current 2.5% 12-month pace.

But with consumption sputtering and investment retreating, the numbers quietly reward those arguing for predictable rules, lower borrowing costs and space for private decisions over grand state-led experiments.

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