Latest Focus Report Shows Brazil’s Growth Slows to 2.16% in 2025
The Central Bank’s Focus survey shows Brazil’s GDP will grow 2.16% in 2025, down from last week’s 2.19% forecast. The report, released on September 8, confirms the economy will expand 1.85% in 2026 and 1.88% in 2027 while inflation stays above target.
Brazil’s GDP rose 0.4% in the second quarter, its highest quarterly growth since 1996, yet it slowed from the 1.3% gain in the first quarter.
Services drove much of this expansion, as industry and agriculture lagged. Higher interest rates and a cooling domestic market drove the moderation.
The Focus report holds the official inflation forecast at 4.85% for 2025. That rate exceeds the central bank’s upper target of 4.5%. Inflation expectations fall to 4.3% in 2026 and 3.94% in 2027.
In July, consumer prices grew 0.26%, driven by higher energy costs. Food prices declined for the second month, tempering the overall rise. The central bank kept the Selic rate at 15% in July after seven consecutive hikes.
The Focus survey sees no change in 2025. It projects the rate at 12.5% in 2026 and 10.5% in 2027. High borrowing costs cool demand and curb inflation but may restrain investment.
Policy makers cited U.S. trade policy uncertainties when pausing rate hikes. They signaled they may raise rates again if inflation fails to fall.
Banks set consumer rates above the Selic rate, reflecting credit risk and administrative costs. Lowering the Selic rate should eventually boost lending and fuel growth but could reverse price stability.
The survey trimmed its dollar forecast for end-2025 to R$5.55 per U.S. dollar, down from R$5.56 last week. Four weeks ago, analysts expected R$5.60. A stronger real helps importers but remains vulnerable to external shocks.
This report underscores the delicate balance between controlling inflation and supporting growth. High interest rates and a stronger currency should tame price pressures, yet they risk slowing recovery. Businesses and households must navigate tighter credit conditions and rising costs in the year ahead.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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