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Brazil‘s Economic Growth Projected to Slow, Potential for Contraction in Q4
RIO DE JANEIRO, BRAZIL – Brazil’s economic momentum is expected to wane in the coming months, with projections indicating a slowdown in the second quarter and a potential for stagnation or even negative growth in the fourth, according to economists. While the economy experienced robust growth in the first quarter, factors including tighter monetary policy, a higher comparison base, and recently imposed U.S.tariffs are contributing to increasing uncertainty.
Economists anticipate a 0.5% growth in the second quarter, with full-year expectations ranging from 2% to 2.3%, despite a recent slowdown. However, these forecasts carry a “low bias” due to both domestic and international uncertainties.
“We see a total GDP around zero or even slightly negative,” stated Margato, highlighting concerns for the fourth quarter. The absence of a “precatory effect” – a one-time boost from previous measures – coupled with the lagged impact of monetary tightening, is expected to weigh on growth.
the imposition of tariffs by U.S. President Donald Trump adds another layer of complexity. Potential impacts on Brazilian industrial sectors and exports are generating market uncertainty, which can stifle investment.
“When we add uncertainty, even though, effectively, the data may not be so bad, investors start to get a little silent because they do not know what will happen,” explained Juliana Trece, an economist at Ibre/FGV.”Usually they expect more facts, and this is bad as investment decisions precede the result we will see in the economic activity up front.”
The upcoming release of the iPhone 17, boosted by new AI features in iOS 26, is also noted as a potential driver of economic activity.
